The let-23 gene, which encodes a putative tyrosine kinase of the epidermal growth factor (EGF) receptor subfamily, has multiple functions during Caenorhabditis elegans development. We show that let-23 function is required for vulval precursor cells (VPCs) to respond to the signal that induces vulval differentiation: a complete loss of let-23 function results in no induction. However, some let-23 mutations that genetically reduce but do not eliminate let-23 function result in VPCs apparently hypersensitive to inductive signal: as many as five of six VPCs can adopt vulval fates, in contrast to the three that normally do. These results suggest that the let-23 receptor tyrosine kinase controls two opposing pathways, one that stimulates vulval differentiation and another that negatively regulates vulval differentiation. Furthermore, analysis of 16 new let-23 mutations indicates that the let-23 kinase functions in at least five tissues. Since various let-23 mutant phenotypes can be obtained independently, the let-23 gene is likely to have tissue-specific functions.