Development of complex nervous systems requires precisely controlled neurogenesis. The generation and specification of neurons occur through the transcriptional and post-transcriptional control of complex regulatory networks. In vertebrates and invertebrates, the proneural basic-helix-loop-helix (bHLH) family of transcription factors has multiple functions in neurogenesis. Here, we identified the LIN-32/Atonal bHLH transcription factor as a key regulator of URXL/R oxygen-sensing neuron development in Caenorhabditis elegans. When LIN-32/Atonal expression is lost, the expression of URX specification and terminal differentiation genes is abrogated. As such, lin-32 mutant animals are unable to respond to increases in environmental oxygen. The URX neurons are generated from a branch of the cell lineage that also produces the CEPDL/R and URADL/R neurons. We found development of these neurons is also defective, suggesting that LIN-32/Atonal regulates neuronal development of the entire lineage. Finally, our results show that aspects of URX neuronal fate are partially restored in lin-32 mutant animals when the apoptosis pathway is inhibited. This suggests that, as in other organisms, LIN-32/Atonal regulates neuronal apoptosis.