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Locomotory activity is defined by the specification of motoneurone subtypes. In the nematode, C. elegans, DA and DB motoneurones innervate dorsal muscles and function to induce movement in the backwards or forwards direction, respectively. These two neurone classes express separate sets of genes and extend axons with oppositely directed trajectories; anterior (DA) versus posterior (DB). The DA-specific homeoprotein UNC-4 interacts with UNC-37/Groucho to repress the DB gene, acr-5 (nicotinic acetylcholine receptor subunit). We show that the C. elegans even-skipped-like homoedomain protein, VAB-7, coordinately regulates different aspects of the DB motoneurone fate, in part by repressing unc-4. Wild-type DB motoneurones express VAB-7, have posteriorly directed axons, express ACR-5 and lack expression of the homeodomain protein UNC-4. In a vab-7 mutant, ectopic UNC-4 represses acr-5 and induces an anteriorly directed DB axon trajectory. Thus, vab-7 indirectly promotes DB-specific gene expression and posteriorly directed axon outgrowth by preventing UNC-4 repression of DB differentiation. Ectopic expression of VAB-7 also induces DB traits in an unc-4-independent manner, suggesting that VAB-7 can act through a parallel pathway. This work supports a model in which a complementary pair of homeodomain transcription factors (VAB-7 and UNC-4) specifies differences between DA and DB neurones through inhibition of the alternative fates. The recent findings that Even-skipped transcriptional repressor activity specifies neurone identity and axon guidance in the mouse and Drosophila motoneurone circuit points to an ancient origin for homeoprotein-dependent mechanisms of neuronal differentiation in the metazoan nerve cord.