The anchor cell (AC) of the Caenorhabditis elegans gonad has a critical role in the development of a functional egg-laying system, which is accomplished through cell-cell interactions. Lateral inhibitory lin-12-mediated signaling among two bipotential cells causes one to adopt the ventral uterine precursor (VU) cell fate while the other becomes the AC. The AC then induces formation of vulval tissue. We find that the AC also induces a particular ventral uterine intermediate precursor fate (pi) by a mechanism that is genetically and temporally distinct from vulval induction. This process requires lin-12, but unlike previously described lin-12-mediated decisions, signaling is unidirectional, is between dissimilar cells and does not involve lateral inhibition. The pi fates are necessary for egg laying and appear to produce a distinct specialized cell type. Thus, patterning of the ventral uterus by the AC is crucial to the development of a functional egg-laying system.