A key question in development is how pluripotent progenitors are progressively restricted to acquire specific cell fates. Here we investigate how embryonic blastomeres in C. elegans develop into foregut (pharynx) cells in response to the selector gene PHA-4/FoxA. When pha-4 is removed from pharyngeal precursors, they exhibit two alternative responses. Before late-gastrulation (8E stage), these cells lose their pharyngeal identity and acquire an alternative fate such as ectoderm (Specification stage). After the Specification stage, mutant cells develop into aberrant pharyngeal cells (Morphogenesis/Differentiation stage). Two lines of evidence suggest that the Specification stage depends on transcriptional repression of ectodermal genes by pha-4. First, pha-4 exhibits strong synthetic phenotypes with the B class synMuv gene tam-1 (Tandam Array expression Modifier 1) and with a mediator of transcriptional repression, the NuRD complex (NUcleosome Remodeling and histone Deacetylase). Second, pha-4 associates with the promoter of the ectodermal regulator lin-26 and is required to repress lin-26 expression. We propose that restriction of early blastomeres to the pharyngeal fate depends on both repression of ectodermal genes and activation of pharyngeal genes by PHA-4.