The Caenorhabditis elegans vulval precursor cells (VPCs) offer a paradigm for investigating how multipotency of progenitor cells is maintained during periods of quiescence. The VPCs are born in the first larval stage. When hermaphrodites are grown under favorable conditions, the EGF-mediated "inductive" signal and the LIN-12/Notch-mediated "lateral" signal confer a precise spatial pattern of distinct vulval cell fates in the third larval stage, a day after hatching. Under adverse conditions, hermaphrodites undergo a prolonged quiescent period as dauer larvae, which can endure for several months with progenitor cells such as VPCs in developmental arrest. If favorable conditions ensue, larvae recover and resume development as postdauer third stage larvae, with the same VPC spatial-patterning events as in continuously developing third stage larvae. Here, we identify several consequences of dauer life history for VPC specification. In wild-type dauers, VPCs undergo a phenomenon reminiscent of natural direct reprogramming to maintain or reestablish multipotency; they acquire an active block to signal transduction by EGF receptor and LIN-12/Notch and have a different mechanism for regulating transcription of the lateral signal. Furthermore, DAF-16/FoxO, a target of insulin/insulin-like growth factor signaling, is required to promote VPC fate plasticity during dauer and for normal vulval patterning after passage through dauer, suggesting that DAF-16/FoxO coordinates environment and life history with plasticity of cell fate.