Reduced insulin/IGF-1-like signaling (IIS) extends C. elegans lifespan by upregulating stress response (class I) and downregulating other (class II) genes through a mechanism that depends on the conserved transcription factor DAF-16/FOXO. By integrating genome-wide mRNA expression responsiveness to DAF-16 with genome-wide in vivo binding data for a compendium of transcription factors, we discovered that PQM-1 is the elusive transcriptional activator that directly controls development (class II) genes by binding to the DAF-16-associated element (DAE). DAF-16 directly regulates class I genes only, through the DAF-16-binding element (DBE). Loss of PQM-1 suppresses daf-2 longevity and further slows development. Surprisingly, the nuclear localization of PQM-1 and DAF-16 is controlled by IIS in opposite ways and was also found to be mutually antagonistic. We observe progressive loss of nuclear PQM-1 with age, explaining declining expression of PQM-1 targets. Together, our data suggest an elegant mechanism for balancing stress response and development.