Cell fate is determined by cell-specific activation of transcription factor sigma F after asymmetric division during sporulation by Bacillus subtilis. The activity of sigma F is governed by SpoIIAA, SpoIIAB, and SpoIIE, a membrane protein localized at the polar septum. SpoIIAB binds to and inhibits sigma F, and SpoIIAA inhibits SpoIIAB, which prevents SpoIIAB from binding to sigma F. SpoIIAB is also a serine kinase that inactivates SpoIIAA. Here, it is demonstrated that SpoIIE dephosphorylates SpoIIAA-P and overcomes SpoIIAB-mediated inhibition of sigma F. The finding that SpoIIE is a serine phosphatase links asymmetric division to the pathway governing cell-specific gene transcription.