Caenorhabditis elegans is an excellent model to observe cell movements and shape changes during the morphogenesis of the egg-shaped embryo into an elongated tube-like larva. Although much is known about the structural determinants involved in epidermal morphogenesis, relatively little is known about the transcriptional and post-transcriptional regulatory networks involved. Here, we describe the identification and functional characterization of the novel nuclear protein VAB-23, which belongs to a conserved protein family found in all metazoans. C. elegans VAB-23 is essential for ventral closure and elongation of the embryo. Time-lapse analysis indicates that VAB-23 is required for the formation of proper cell contacts between contralateral pairs of ventral epidermal cells. Tissue-specific rescue experiments reveal a function of VAB-23 in ventral neuroblasts that control the enclosure of the embryo by the overlaying epidermal cells. Finally, we provide evidence suggesting a role of VAB-23 in post-transcriptional gene regulation. We thus propose that VAB-23 regulates the expression of multiple secreted guidance cues in ventral neuroblasts that direct the migration of the overlaying epidermal cells. Members of the VAB-23 family may perform similar functions during morphogenesis in other metazoans.