Plants, similarly to animals, form polarized axes during embryogenesis on which cell differentiation and organ patterning programs are orchestrated. During Arabidopsis embryogenesis, establishment of the shoot and root stem cell populations occurs at opposite ends of an apical-basal axis. Recent work has identified the PLETHORA (PLT) genes as master regulators of basal/root fate, whereas the master regulators of apical/shoot fate have remained elusive. Here we show that the PLT1 and PLT2 genes are direct targets of the transcriptional co-repressor TOPLESS (TPL) and that PLT1/2 are necessary for the homeotic conversion of shoots to roots in tpl-1 mutants. Using tpl-1 as a genetic tool, we identify the CLASS III HOMEODOMAIN-LEUCINE ZIPPER (HD-ZIP III) transcription factors as master regulators of embryonic apical fate, and show they are sufficient to drive the conversion of the embryonic root pole into a second shoot pole. Furthermore, genetic and misexpression studies show an antagonistic relationship between the PLT and HD-ZIP III genes in specifying the root and shoot poles.