We have isolated mutations defining a new gene, tlp-1, that affect asymmetric cell fates and morphogenesis during the development of the C. elegans tail. tlp-1 mutations cause defects in the specification of asymmetric cell fates in the descendants of the T blast cell, whose polarity is controlled by Wnt signaling and cause abnormal male tail development leading to the formation of a posterior protrusion reminiscent of ‘leptoderan’, or pointy tailed, nematode species. In wild-type C. elegans males, which have a ‘peloderan’ or rounded tail, retraction of the tail tip hypodermis involves a temporally ordered set of cell fusions and changes in cell shape that appear to be heterochronically delayed in tlp-1 males, suggesting that subtle changes in these events can bring about evolutionary changes in morphology. tlp-1 encodes a C2H2 zinc-finger protein that is a member of the Sp family of transcription factors. A TLP-1::GFP fusion protein is expressed in the nuclei of many cells during early embryogenesis and then becomes restricted primarily to posterior cells. At hatching, it is expressed in several head neurons, the posterior intestine cells, tail hypodermal cells, the T cells and specific T-cell descendents in a pattern that suggests TLP-1 may be asymmetrically expressed during the divisions of the T cell lineage. Furthermore, the asymmetry of TLP-1 expression and function appears to be controlled by Wnt signals that control T cell polarity. These results suggest that tlp-1 encodes a transcription factor required for cellular asymmetry that functions downstream of Wnt signals that control cell polarity, as well as in cell fusion and patterning in the C. elegans tail.