C. elegans diapause, gonadal outgrowth, and life span are regulated by a lipophilic hormone, which serves as a ligand to the nuclear hormone receptor DAF-12. A key step in hormone production is catalyzed by the CYP450 DAF-9, but the extent of the biosynthetic pathway is unknown. Here, we identify a conserved Rieske-like oxygenase, DAF-36, as a component in hormone metabolism. Mutants display larval developmental and adult aging phenotypes, as well as patterns of epistasis similar to that of daf-9. Larval phenotypes are potently reversed by crude lipid extracts, 7-dehydrocholesterol, and a recently identified DAF-12 sterol ligand, suggesting that DAF-36 works early in the hormone biosynthetic pathway. DAF-36 is expressed primarily within the intestine, a major organ of metabolic and endocrine control, distinct from DAF-9. These results imply that C. elegans hormone production has multiple steps and is distributed, and that it may provide one way that tissues register their current physiological state during organismal commitments.