In response to small molecule signals such as retinoids or steroids, nuclear receptors activate gene expression to regulate development in different tissues. microRNAs turn off target gene expression within cells by binding complementary regions in mRNA transcripts, and they have been broadly implicated in development and disease. Here we show that the C. elegans nuclear receptor DAF-12 and its steroidal ligand directly activate promoters of let-7 microRNA family members to downregulate the microRNA target hbl-1 and drive progression of epidermal stem cells from second to third larval stage patterns of cell division. Conversely, the unliganded receptor represses microRNA expression during developmental arrest. These findings identify microRNAs as components of a hormone-coupled molecular switch that shuts off earlier developmental programs to allow for later ones.Lipophilic hormones coordinate organism-wide developmental progression in metazoans by binding to nuclear hormone receptors (NHR), converting the presence or absence of ligand into changes in gene expression patterns(1). This regulation is conserved in the nematode C. elegans, where the nuclear hormone receptor (NHR) DAF-12, a homolog of vertebrate liver-X and vitamin D receptors, regulates developmental progression or arrest in response to the environment(2,3). In favorable environments, activation of TGF-β and insulin/IGF signaling cascades result in production of the DAF-12 steroidal ligands, the dafachronic acids (e.g. Δ4-DA), which promote rapid progression through four larval stages (L1-L4) to reproductive adults(4). In unfavorable environments, endocrine systems are suppressed and the unliganded DAF-12 causes arrest at a stress-resistant, long-lived alternative third larval stage, called the dauer diapause (L3d) (5). A more cell-intrinsic level of developmental control is exerted by microRNAs (miRs). miRs are ~20-22nt long RNA molecules that bind to the 3'UTR of target mRNAs and decrease their expression (6-8). Null mutants for several miR genes show tissue-selective failure of progression from one stage-specific program to the next, generally described as heterochronic phenotypes. These phenotypes are most visible in the hypodermis, where hypodermal seam cells undergo invariant asymmetric stem cell division patterns, in which one daughter cell fuses to the hypodermal syncitium whereas the other retains stem cell character and its capacity to divide (9). Only during L2, do seam cells undergo one proliferative division prior to stem cell division, and repetition or loss of this program leads to changes in overall seam cell number