The lin-2 gene is required for the induction of the Caenorhabditis elegans vulva. Vulval development is initiated by a signal from the anchor cell that is transduced by a receptor tyrosine kinase/Ras pathway. We show that lin-2 acts in the vulval precursor cell P6.p, downstream of lin-3 EGF and upstream of let-60 ras, to allow expression of the 1 degrees cell fate. lin-2 encodes a protein of relative molecular mass 109,000 (LIN-2A) with regions of similarity to CaM kinase II and membrane-associated guanylate kinases. Mutant lin-2 transgenes designed to lack either protein kinase or guanylate kinase activity are functional, indicating that LIN-2A has a structural rather than an enzymatic role in vulval induction. Most or all identified membrane-associated guanylate kinases are components of cell junctions, including vertebrate tight junctions and arthropod septate junctions in epithelia. Thus, LIN-2A may be a component of the cell junctions of the epithelial vulval precursor cells that is required for signaling by the receptor tyrosine kinase LET-23. We propose that LIN-2A is required for the localization of one or more signal transduction proteins (such as LET-23) to either the basal membrane domain or the cell junctions, and that mislocalization of signal transduction proteins in lin-2 mutants interferes with vulval induction.