During development, one mechanism for generating different cell types is asymmetric cell division, by which a cell divides and contributes different factors to each of its daughter cells. Asymmetric cell division occurs throughout the eukaryotic kingdom, from yeast to humans. Many asymmetric cell divisions occur in a defined orientation. This implies a cellular mechanism for sensing direction, which must ultimately lead to differences in gene expression between two daughter cells. In this review, we describe two classes of molecules: regulatory factors that are differentially expressed upon asymmetric cell division, and components of a signal transduction pathway that may define cell polarity. The lin-11 and mec-3 genes of C. elegans, the Isl-1 gene of mammals and the HO gene of yeast, encode regulatory factors that determine cell type of one daughter after asymmetric cell division. The CDC24 and CDC42 genes of yeast affect both bud positioning and orientation of mating projections, and thus may define a general cellular polarity. We speculate that molecules such as Cdc24 and Cdc42 may regulate expression of genes such as lin-11, mec-3, Isl-1 and HO upon asymmetric cell division.