We describe two classes of mutations in the lin-12 locus of the nematode Caenorhabditis elegans. Ten semidominant mutations (lin-12[d]) appear to elevate the level of lin-12 activity. Thirty-two recessive alleles (lin-12[0]), including two amber mutations, appear to eliminate gene activity. The lin-12(d) and lin-12(0) mutations result in reciprocal homeotic transformations in the fates of defined cells in several different tissues. Gene dosage studies suggest that a high level of lin-12 activity specifies one cell fate and a low level specifies an alternative fate. Temperature-shift experiments indicate that lin-12 acts at the time cell fate is determined in wild type. We propose that lin-12 functions as a binary switch to control decisions between alternative cell fates during C. elegans development.