During Caenorhabditis elegans vulval induction, multipotent precursors respond to an inductive signal by generating vulval cells as opposed to non-specialized epidermal cells. Both classical and 'reverse' genetic approaches have revealed that a cascade of nematode homologues of mammalian proto-oncogenes is necessary for induction of the vulva. The inductive signal is a growth factor encoded by the lin-3 gene and its candidate receptor is a tyrosine kinase encoded by the let-23 gene. let-23 acts via a Ras protein encoded by the let-60 gene. A nematode homologue of mammalian raf family protein serine/threonine kinases has been cloned and found to be encoded by the lin-45 gene. Dominant negative lin-45 raf mutants prevent vulval induction. A recessive lin-45 raf mutation prevents the excessive vulval differentiation caused by activated ras, indicating that raf might act downstream of ras during vulval induction.