The development of the C. elegans hypodermis is an excellent model for understanding cell fate specification and differentiation. Early events in C.elegans embryogenesis induce hypodermal precursor cells to adopt one of several fates among them, becoming dorsal, lateral or ventral hypodermal cells. The regulatory network that drives hypodermal cell fate specification is an intriguing process that still has much to be understood. While several transcription factors that function in specifying the major hypodermal cell fates have been identified, little is known about how the ventral and the lateral hypodermal cells are specified to adopt different fates and undergo distinct morphogenetic processes. Our findings begin to address how the ventral hypodermis is prevented from adopting a seam cell fate. Previously, we showed by mapping experiments and whole genome sequencing that pvl-4 is the Paired-box gene pax-3, which encodes the sole PAX-3 transcription factor homolog in C. elegans. We (and others) report that pax-3 is expressed in the ventral P cells during embryogenesis and early larval stages. Mutants for pax-3show embryonic and larval lethality as well as several body morphology defects that indicate abnormal cell fate specification in the hypodermis. Using several reporter genes we observed that in pax-3 reduction-of-function animals the ventral P cells appear to undergo a cell fate transformation and adopt a lateral seam cell-like fate. Furthermore, forced expression of pax-3 in the seam cells caused them to lose expression of seam cell markers. Based on these findings, we propose that pax-3 functions in the embryonic ventral hypodermal cells to repress the lateral seam cell fate. pax-3 promoter deletion analysis identified a cis-regulatory element that is necessary for pax-3expression in the embryonic P cells. Our current aim is to identify factors that regulate pax-3 expression and that may function with pax-3 in ventral cell fate specification. To do so, we used the Yeast One-Hybrid (Y1H) method to screen for factors that bind the pax-3 cis-regulatory element. Potential candidates are currently being analyzed.