The C. elegans epidermis is a simple epithelium comprised of three major cell types, the seam, syncytial and P cells. While specification of all major epidermal cells is known to require the ELT-1 GATA transcription factor, little is known about how the individual epidermal cell types are specified. We report that elt-5 and -6, adjacent genes encoding GATA factors, are essential for the development of the lateral epidermal cells, the seam cells. Inhibition of elt-5 and -6 function by RNA-mediated interference results in penetrant late embryonic and early larval lethality. Seam cells in affected animals do not differentiate properly: the alae, seam-specific cuticular structures, are generally absent and expression of several seam-specific markers is blocked. In addition, elt-3, which encodes another GATA factor normally expressed in non-seam epidermis, is often ectopically expressed in the seam cells of affected animals, demonstrating that ELT-5 and -6 repress elt-3 expression in wild-type seam cells. Seam cells in affected animals often undergo inappropriate fusion with the epidermal syncytia. Interference of elt-5 and -6 function during larval development can cause fusion of all seam cells with the surrounding syncytia and pronounced defects in molting. elt-5 and -6 are both expressed in seam cells and many other cells, and are apparently functionally interchangeable. Their expression is controlled by separable tissue-specific regulatory elements and the apportionment of monocistronic versus dicistronic transcription of both genes appears to be subject to cell-type-specific regulation. Collectively, these findings indicate that elt-5 and -6 function continuously throughout C. elegans development to regulate seam cell differentiation and cell fusion.