Wnt signaling regulates many aspects of metazoan development, including stem cells. In C. elegans, Wnt/MAPK signaling controls asymmetric divisions. A recent model proposed that the POP-1/TCF DNA binding protein works together with SYS-1/beta-catenin to activate transcription of target genes in response to Wnt/MAPK signaling. The somatic gonadal precursor (SGP) divides asymmetrically to generate distal and proximal daughters of distinct fates: only its distal daughter generates a distal tip cell (DTC), which is required for stem cell maintenance. No DTCs are produced in the absence of POP-1/TCF or SYS-1/beta-catenin, and extra DTCs are made upon overexpression of SYS-1/beta-catenin. Here we report that POP-1/TCF and SYS-1/beta-catenin directly activate transcription of ceh-22/nkx2.5 isoforms in SGP distal daughters, a finding that confirms the proposed model of Wnt/MAPK signaling. In addition, we demonstrate that the CEH-22/Nkx2.5 homeodomain transcription factor is a key regulator of DTC specification. We speculate that these conserved molecular regulators of the DTC niche in nematodes may provide insight into specification of stem cell niches more broadly.