The acquisition of a specific cellular identity is usually paralleled by a restriction of cellular plasticity. Whether and how these two processes are coordinated is poorly understood. Transcription factors called terminal selectors activate identity-specific effector genes during neuronal differentiation to define the structural and functional properties of a neuron. To study restriction of plasticity, we ectopically expressed C. elegans CHE-1, a terminal selector of ASE sensory neuron identity. In undifferentiated cells, ectopic expression of CHE-1 results in activation of ASE neuron type-specific effector genes. Once cells differentiate, their plasticity is restricted and ectopic expression of CHE-1 no longer results in activation of ASE effector genes. In striking contrast, removal of the respective terminal selectors of other sensory, inter-, or motor neuron types now enables ectopically expressed CHE-1 to activate its ASE-specific effector genes, indicating that terminal selectors not only activate effector gene batteries but also control the restriction of cellular plasticity. Terminal selectors mediate this restriction at least partially by organizing chromatin. The chromatin structure of a CHE-1 target locus is less compact in neurons that lack their resident terminal selector and genetic epistasis studies with H3K9 methyltransferases suggest that this chromatin modification acts downstream of a terminal selector to restrict plasticity. Taken together, terminal selectors activate identity-specific genes and make non-identity-defining genes less accessible, thereby serving as a checkpoint to coordinate identity specification with restriction of cellular plasticity.