The C. elegans MS blastomere, born at the 7-cell stage of embryogenesis, generates primarily mesodermal cell types, including pharynx cells, body muscles and coelomocytes. A presumptive null mutation in the T-box factor gene tbx-35, a target of the MED-1 and MED-2 divergent GATA factors, was previously found to result in a profound decrease in the production of MS-derived tissues, although the tbx-35(-) embryonic arrest phenotype was variable. We report here that the NK-2 class homeobox gene ceh-51 is a direct target of TBX-35 and at least one other factor, and that CEH-51 and TBX-35 share functions. Embryos homozygous for a ceh-51 null mutation arrest as larvae with pharynx and muscle defects, although these tissues appear to be specified correctly. Loss of tbx-35 and ceh-51 together results in a synergistic phenotype resembling loss of med-1 and med-2. Overexpression of ceh-51 causes embryonic arrest and generation of ectopic body muscle and coelomocytes. Our data show that TBX-35 and CEH-51 have overlapping function in MS lineage development. As T-box regulators and NK-2 homeodomain factors are both important for heart development in Drosophila and vertebrates, our results suggest that these regulators function in a similar manner in C. elegans to specify a major precursor of mesoderm.