Activation of EGFR-Ras-MAPK signaling in vulval precursor cells (VPCs) by LIN-3/EGF from the gonad induces vulval development in C. elegans. The prevailing view is that LIN-3 overcomes an "inhibitory signal" from the adjacent hyp7 hypodermal syncytium. This view originated from observations indicating that inactivation of functionally redundant Synthetic Multivulva (SynMuv) genes in hyp7 can activate EGFR-Ras-MAPK signaling in the VPCs. Many SynMuv genes encode transcription and chromatin-associated factors, including the Rb ortholog. Here, we show that the SynMuv A and SynMuv B gene classes are functionally redundant for transcriptional repression of the key target gene, lin-3/EGF, in the hypodermis. These observations necessitate a revision of the concept of "inhibitory signaling." They also underscore the importance of preventing inappropriate cell signaling during development and suggest that derepression of growth factors may be the mechanism by which tumor suppressor genes such as Rb can have cell nonautonomous effects.