Lateral organ polarity in Arabidopsis is regulated by antagonistic interactions between genes that promote either adaxial or abaxial identity, but the molecular basis of this interaction is largely unknown. We show that the adaxial regulator ASYMMETRIC LEAVES2 (AS2) is a direct target of the abaxial regulator KANADI1 (KAN1), and that KAN1 represses the transcription of AS2 in abaxial cells. Mutation of a single nucleotide in a KAN1 binding site in the AS2 promoter causes AS2 to be ectopically expressed in abaxial cells, resulting in a dominant, adaxialized phenotype. We also show that the abaxial expression of KAN1 is mediated directly or indirectly by AS2. These results demonstrate that KAN1 acts as a transcriptional repressor and that mutually repressive interactions between KAN1 and AS2 contribute to the establishment of adaxial-abaxial polarity in plants. A screen for mutations that affect the expression of a GFP reporter for KANADI2 produced mutations in two genes, CENTER CITY (CCT) and GRAND CENTRAL (GCT). Mutations in GCT and CCT delay the specification of central and peripheral identity and the globular-to-heart transition, but have little or no effect on the initial growth rate of the embryo. Mutant embryos eventually recover and undergo relatively normal patterning, albeit at an inappropriate size. GCT and CCT were identified as the Arabidopsis orthologs of MED12 and MED13--evolutionarily conserved proteins that act in association with the Mediator complex to negatively regulate transcription. The predicted function of these proteins combined with the effect of gct and cct on embryo development suggests that MED12 and MED13 regulate pattern formation during Arabidopsis embryogenesis by transiently repressing a transcriptional program that interferes with this process. Their mutant phenotype reveals the existence of a previously unknown temporal regulatory mechanism in plant embryogenesis.