The gene mab-21, which encodes a novel protein of 386 amino acids, is required for the choice of alternate cell fates by several cells in the C. elegans male tail. Three cells descended from the ray 6 precursor cell adopt fates of anterior homologs, and a fourth, lineally unrelated hypodermal cell is transformed into a neuroblast. The affected cells lie together in the lateral tail epidermis, suggesting that mab-21 acts as part of a short-range pattern-formation mechanism. Each of the changes in cell fate brought about by mab-21 mutants can be interpreted as a posterior-to-anterior homeotic transformation. mab-21 mutant males and hermaphrodites have additional pleiotropic phenotypes affecting movement, body shape and fecundity, indicating that mab-21 has functions outside the tail region of males. We show that the three known alleles of mab-21 are hypomorphs of a new gene. Mosaic analysis revealed that mab-21 acts cell autonomously to specify the properties of the sensory ray, but non-autonomously in the hypodermal versus neuroblast cell fate choice. Presence of cell signalling in the choice of the neuroblast fate was confirmed by cell ablation experiments. Mutations in mab-21 were shown previously to be genetic modifiers of the effects of HOM-C/Hox gene mutations on ray identity specification. The results presented here support the conclusion that mab-21 acts as part of a mechanism required for correct cell fate choice, possibly involving the function of HOM-C/Hox genes in several body regions.