During Caenorhabditis elegans gonadal development, a stochastic interaction between the LIN-12/Notch receptor and the LAG-2/Delta ligand initiates cell fate specification of two equivalent pre-anchor cell (AC)/pre-ventral uterine (VU) precursor cells. Both cells express lin-12 and lag-2 before specification, and a small difference in LIN-12 activity leads to the exclusive expression of lin-12 in VUs and lag-2 in the AC through an unknown feedback mechanism. In this Notch signaling process, the cleaved LIN-12/Notch intracellular domain (NICD) binds to the LAG-1/CSL transcriptional repressor, forming a transcriptional activator complex containing LAG-1 and NICD. Here we show that clustered LAG-1 binding sites in lin-12 and lag-1 are involved in regulating lin-12 and lag-1 expression during AC/VU cell fate specification. Both genes are expressed in VU cells, but not the AC, after specification. We also show that lin-12 is necessary for lag-1 expression in VU cells. Interestingly, lin-12 (null) animals express lag-1 in the AC, suggesting that LIN-12 signaling is necessary for the suppression of lag-1 expression in the AC. Ectopic expression of lag-1 cDNA in the AC causes a defect in the vulvaluterine (V-U) connection; therefore, LAG-1 should be eliminated in the AC to form a normal V-U connection at a later developmental stage in wild-type animals.