lin-28 is a conserved regulator of cell fate succession in animals. In Caenorhabditis elegans, it is a component of the heterochronic gene pathway that governs larval developmental timing, while its vertebrate homologs promote pluripotency and control differentiation in diverse tissues. The RNA binding protein encoded by lin-28 can directly inhibit let-7 microRNA processing by a novel mechanism that is conserved from worms to humans. We found that C. elegans LIN-28 protein can interact with four distinct let-7 family pre-microRNAs, but in vivo inhibits the premature accumulation of only let-7. Surprisingly, however, lin-28 does not require let-7 or its relatives for its characteristic promotion of second larval stage cell fates. In other words, we find that the premature accumulation of mature let-7 does not account for lin-28's precocious phenotype. To explain let-7's role in lin-28 activity, we provide evidence that lin-28 acts in two steps: first, the let-7-independent positive regulation of hbl-1 through its 3'UTR to control L2 stage-specific cell fates; and second, a let-7-dependent step that controls subsequent fates via repression of lin-41. Our evidence also indicates that let-7 functions one stage earlier in C. elegans development than previously thought. Importantly, lin-28's two-step mechanism resembles that of the heterochronic gene lin-14, and the overlap of their activities suggests a clockwork mechanism for developmental timing. Furthermore, this model explains the previous observation that mammalian Lin28 has two genetically separable activities. Thus, lin-28's two-step mechanism may be an essential feature of its evolutionarily conserved role in cell fate succession.