We have used expression profiling and in vivo imaging to characterize Caenorhabditis elegans embryos as they transit from a developmentally plastic state to the onset of differentiation. Normally, this transition is accompanied by activation of developmental regulators and differentiation genes, downregulation of early-expressed genes, and large-scale reorganization of chromatin. We find that loss of plasticity and differentiation onset depends on the Polycomb complex protein mes-2/E(Z). mes-2 mutants display prolonged developmental plasticity in response to heterologous developmental regulators. Early-expressed genes remain active, differentiation genes fail to reach wild-type levels, and chromatin retains a decompacted morphology in mes-2 mutants. By contrast, loss of the developmental regulators pha-4/FoxA or end-1/GATA does not prolong plasticity. This study establishes a model by which to analyze developmental plasticity within an intact embryo. mes-2 orchestrates large-scale changes in chromatin organization and gene expression to promote the timely loss of developmental plasticity. Our findings indicate that loss of plasticity can be uncoupled from cell fate specification.