ten-m (odz) is the only pair-rule gene discovered in Drosophila that encodes a transmembrane protein and not a transcription factor. The vertebrate Ten-m orthologues have been implicated in pattern formation and neuronal development. To investigate the role of this protein in development, we characterize here the structure and function of the Caenorhabditis elegans orthologue ten-1. We found that two promoters control the expression of two different ten-1 transcripts. This results in the expression of type II transmembrane protein variants differing in their intracellular domains. Both ten-1 transcripts show complex, but distinct, expression patterns during development and in the adult. Interference with Ten-1 expression by RNAi experiments leads to multiple phenotypes resulting in defects in hypodermal cell migration, neuronal migration, pathfinding and fasciculation, distal tip cell migration, the establishment of the somatic gonad, and gametogenesis. The RNAi phenotypes were confirmed by the analysis of a deletion mutant which revealed that Ten-1 is essential for somatic gonad formation. The intracellular domain of the long form was detected at the cell membrane and in the nucleus. We propose that Ten-1 acts as a receptor for morphogenetic cue(s) and directly signals to the nucleus by translocation of its intracellular domain to the nucleus following its proteolytic release from the cell membrane.