A fundamental question in developmental biology is how a single multipotent cell undergoes cell divisions and fate specification to give rise to different cell types. In this process, multiple signaling events and transcription factors play critical roles. The understanding of the developmental mechanisms is especially important because malfunction of many developmental players usually associates with various human diseases. I have studied a transcription factor SEM-2, a C. elegans homolog of vertebrate SoxC proteins. Mis-regulation of SoxC has been shown to associate with multiple types of tumors. However, the molecular mechanism by which SoxC gene expression is regulated is not known. I have determined the function of the sole C. elegans SoxC homolog SEM-2 in the M lineage, which produces the postembryonic mesoderm. I found that SEM-2/SoxC is both necessary and sufficient to promote a proliferating blast cell fate, the sex myoblast fate, over a differentiated striated bodywall muscle fate. I have shown that this function of sem-2 is directly regulated by PBC/HOX factors in the M lineage, as demonstrated by computational, in vivo functional and in vitro electrophoretic mobility shift assays (EMSA). I also identified the positional cues that dictate the specific expression of sem-2 in the sex myoblast precursors and their descendants, which include BMP signaling, Notch signaling and Wnt signaling. i Ongoing studies include identifying and analyzing the direct downstream targets of sem-2 in promoting the proliferative over differentiative fates by a candidate gene approach. Another focus of my thesis is on two modulators of BMP signaling in C. elegans: DRAG-1, a GPI (glycophosphatidlinositol)-anchored protein that is the sole member of the repulsive guidance molecule (RGM) family of proteins, and UNC-40, a transmembrane protein that is the sole C. elegans DCC(Deleted in Colorectal Cancer)/neogenin ortholog, best studied for its roles in axon and cell movement. The vertebrate homologs of both proteins have been found to modulate BMP signaling, but the mechanistic details of this regulation are not well understood. Using a combination of molecular genetic and biochemical analyses, I demonstrated that both DRAG-1/RGM and UNC-40/neogenin are positive modulators of BMP signaling at the ligand-receptor level. The role of UNC-40/neogenin in modulating BMP signaling is independent of its role in axon guidance and does not require its intracellular domain. DRAG-1/RGM physically interacts with UNC-40/neogenin, as well as the ligand and the two receptors of the BMP pathway. These results suggest a model in which the interaction between DRAG-1/RGM and UNC-40/neogenin may help the assembly of the ligand/receptor complex at the cell surface to ensure efficient BMP signaling. My work demonstrates a direct link between RGM proteins, Neogenin and BMP signaling in vivo, and provides a simple and genetically tractable system for further mechanistic studies of RGM and Neogenin proteins in regulation of BMP pathways. ii