One mechanism of generating cellular diversity is to distribute developmental potential asymmetrically to daughter cells at mitosis. Two observations described in this report suggest that the C. elegans HAM-1 protein functions in dividing neuroblasts to produce daughter cells that adopt distinct fates. First, HAM-1 is asymmetrically distributed to the periphery of certain mitotic cells, ensuring that it will be inherited by only one daughter cell. Second, ham-1 mutations disrupt the asymmetric divisions of five neuroblasts. In one of these divisions, loss of ham-1 function causes the daughter cell that does not inherit HAM-1 to adopt the fate of the daughter cell that normally inherits HAM-1. We propose that asymmetric distribution of HAM-1 enables daughter cells to adopt distinct fates.