The development of the epidermis of Caenorhabditis elegans involves cell fusion, migration, and differentiation events. To understand the mechanisms underlying these processes, we characterized the roles of NHR-25, a member of the nuclear receptor family of transcription factors. The NHR-25 homologs Ftz-F1 in Drosophila and SF-1 in mammals are involved in various biological processes, including regulation of patterning during development, reproduction, metabolism, metamorphosis, and homeostasis. Impairment of nhr-25 activity leads to severe phenotypes in embryos and many postembryonic tissues. Further analysis has indicated that nhr-25 activity is required for the proper development, including cell-cell fusion, of several epidermal cell types, such as the epidermal syncytial, seam, and Pn.p cells. Our results also suggest that nhr-25 is likely to regulate cell-cell junctions and/or fusion. In a subset of Pn.p cells, called vulval precursor cells, nhr-25 acts collaboratively with the lin-39 Hox gene in regulating vulval cell differentiation. Additionally, our data suggest that nhr-25 may also function with another Hox gene, nob-1, during embryogenesis. Overall, our results indicate that nhr-25 plays an integral role in regulating cellular processes of epidermal cells.Members of the nuclear receptor (NR) superfamily of transcription factors (also known as nuclear hormone receptors [NHRs]) share some highly conserved peptide motifs, including DNA-binding, ligand-binding, and transactivation domains (for a review, see reference 44). However, these proteins carry out diverse physiological functions (for a review, see references 8, 44, and 60). As more NRs have been identified, the features of the ligands for these receptors have been shown to be more chemically diverse, and not exclusively endocrine (for a review, see references 8 and 15). For many of the identified NRs, no apparent ligands have been found, and these proteins are therefore referred to as orphan nuclear receptors (for a review, see references 8 and 43).Members of one subfamily of the orphan receptors bind to nonrepetitive DNA sequences as monomers and are constitutively localized to the nucleus; these members include Drosophila ␣Ftz-F1 (fushi tarazu factor 1) and mammalian SF-1 (steroidogenic factor 1) (42). Previous studies of Drosophila have shown that ␣Ftz-F1 functions collaboratively with a homeodomain protein, fushi tarazu (Ftz), to promote cell fate specification in fly embryos (25, 70). Mutations in ftz or ␣ftz-f1 cause a common pair rule phenotype, which is associated with defects in alternate segments of the embryos. The alternatively spliced  isoform of Ftz-F1 has been found to regulate ecdysone-induced gene expression and therefore is involved in the metamorphosis of flies (4). Mammalian homologues of ftz-f1 include the SF-1 and LRH-1 (liver receptor homologue 1) proteins. SF-1 functions in regulating the transcription of some steroidogenic enzymes and plays an essential role in the development of the adrenal gland and gonad (28,30,37). LR...