Stomata consist of a pair of guard cells that mediate gas and water-vapour exchange between plants and the atmosphere. Stomatal precursor cells-meristemoids-possess a transient stem-cell-like property and undergo several rounds of asymmetric divisions before further differentiation. Here we report that theArabidopsis thalianabasic helix-loop-helix (bHLH) protein MUTE is a key switch for meristemoid fate transition. In the absence ofMUTE,meristemoids abort after excessive asymmetric divisions and fail to differentiate stomata. Constitutive overexpression ofMUTEdirects the entire epidermis to adopt guard cell identity.MUTEhas two paralogues:FAMA,a regulator of guard cell morphogenesis, andSPEECHLESS(SPCH). We show thatSPCHdirects the first asymmetric division that initiates stomatal lineage. Together, SPCH, MUTE and FAMA bHLH proteins control stomatal development at three consecutive steps: initiation, meristemoid differentiation and guard cell morphogenesis. Our findings highlight the roles of closely related bHLHs in cell type differentiation in plants and animals.