Signaling by the epidermal growth factor receptor (EGFR) generates diverse developmental patterns. This requires precise control over the location and intensity of signaling. Elucidation of these regulatory mechanisms is important for understanding development and disease pathogenesis. In Caenorhabditis elegans, LIN-3/EGF induces vulval formation in the mid-body, which requires LET-23/EGFR activation only in P6.p, the vulval progenitor nearest the LIN-3 source. To identify mechanisms regulating this signaling pattern, we screened for mutations that cooperate with a let-23 gain-of-function allele to cause ectopic vulval induction. Here, we describe a dominant gain-of-function mutation in swsn-4, a component of SWI/SNF chromatin remodeling complexes. Loss-of-function mutations in multiple SWI/SNF components reveal that weak reduction in SWI/SNF activity causes ectopic vulval induction, while stronger reduction prevents adoption of vulval fates, a phenomenon also observed with increasing loss of LET-23 activity. High levels of LET-23 expression in P6.p are thought to locally sequester LIN-3, thereby preventing ectopic vulval induction, with slight reductions in its expression interfering with LIN-3 sequestration, but not vulval fate signaling. We find that SWI/SNF positively regulates LET-23 expression in P6.p descendants, providing an explanation for the similarities between let-23 and SWI/SNF mutant phenotypes. However, SWI/SNF regulation of LET-23 expression is cell-specific, with SWI/SNF repressing its expression in the ALA neuron. The swsn-4 gain-of-function mutation affects the PTH domain, and provides the first evidence that its auto-inhibitory function in yeast Sth1p is conserved in metazoan chromatin remodelers. Finally, our work supports broad use of SWI/SNF in regulating EGFR signaling during development, and suggests that dominant SWI/SNF mutations in certain human congenital anomaly syndromes may be gain-of-functions.