POP-1, a Tcf/Lef factor, functions throughout Caenorhabditis elegans development as a Wnt-dependent reiterative switch to generate nonequivalent sister cells that are born by anterior-posterior cell divisions. We have observed the interaction between POP-1 and a target gene that it represses as it responds to Wnt signaling. Dynamic observations in living embryos reveal that POP-1 undergoes Wnt-dependent nucleocytoplasmic redistribution immediately following cytokinesis, explaining the differential nuclear POP-1 levels in nonequivalent sister cells. In unsignaled (anterior) but not Wnt-signaled (posterior) sister cells, POP-1 progressively coalesces into subnuclear domains during interphase, coincident with its action as a repressor. While the asymmetric distribution of POP-1 in nonequivalent sisters apparently requires a 124-amino-acid internal domain, neither the HMG box nor beta-catenin interaction domains are required. We find that a transcriptional activator, MED-1, associates in vivo with the end-1 and end-3 target genes in the mesoderm (anterior sister) and in the endoderm (posterior sister) following the asymmetric cell division that subdivides the mesendoderm. However, in the anterior sister, binding of POP-1 to the end-1 and end-3 genes blocks their expression. In vivo, binding of POP-1 to the end-1 and end-3 targets (in the posterior sister) is blocked by Wnt/MAPK signaling. Thus, a Tcf/Lef factor represses transactivation of genes in an unsignaled daughter cell by abrogating the function of a bound activator.