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In response to small-molecule signals such as retinoids or steroids, nuclear receptors activate gene expression to regulate development in different tissues. MicroRNAs turn off target gene expression within cells by binding complementary regions in messenger RNA transcripts, and they have been broadly implicated in development and disease. Here we show that the Caenorhabditis elegans nuclear receptor DAF-12 and its steroidal ligand directly activate promoters of let-7 microRNA family members to down-regulate the microRNA target hbl-1, which drives progression of epidermal stem cells from second to third larval stage patterns of cell division. Conversely, the receptor without the ligand represses microRNA expression during developmental arrest. These findings identify microRNAs as components of a hormone-coupled molecular switch that shuts off earlier developmental programs to allow for later ones.