The cell-fate specification of the anchor cell (AC) and a ventral uterine precursor cell (VU) in Caenorhabditis elegans is initiated by a stochastic interaction between LIN-12/Notch receptor and LAG-2/Delta ligand in two neighboring Z1.ppp and Z4.aaa cells. Both cells express lin-12 and lag-2 before specification, and a small difference in LIN-12 activity leads to the exclusive expressions of lin-12 in VU and lag-2 in the AC, through a feedback mechanism of unknown nature. Here we show that the expression pattern of lag-1/CSL, a transcriptional repressor itself that turns into an activator upon binding of the intracellular domain of Notch, overlaps with that of lin-12. Site-directed mutagenesis of LAG-1 binding sites in lag-1 maintains its expression in the AC, and eliminates it in the VU. Thus, AC/VU cell-fate specification appears to involve direct regulation of lag-1 expression by the LAG-1 protein, activating its transcription in VU cells, but repressing it in the AC.