In Caenorhabditis elegans, the early embryo contains five somatic founder cells (known as AB, MS, E, C and D) which give rise to very different lineages. Two simply produce twenty intestinal (E) or muscle (D) cells each, whereas the remainder produce a total of 518 cells which collectively contribute in a complex pattern to a variety of tissues. A central problem in embryonic development is to understand how the developmental potential of blastomeres is restricted to permit the terminal expression of such complex differentiation patterns. Here we identify a gene, lit-1, that appears to play a central role in controlling the asymmetry of cell division during embryogenesis in C. elegans. Mutants in lit-1 suggest that its product controls up to six consecutive binary switches which cause one of the two equivalent cells produced at each cleavage to assume a posterior fate. Most blastomere identities in C. elegans may therefore stem from a process of stepwise binary diversification.