Most bacterial populations exhibit phenotypic heterogeneity to increase fitness in rapidly changing environmental conditions. Myxococcus xanthus is an environmental bacterium that displays pronounced phenotypic heterogeneity in its complex lifecycle. Under nutrient-limitation, M. xanthus produces a specialized biofilm in which cells segregate into two spatially distinct fates: fruiting bodies filled with spores, and a persister-like peripheral rod population. Little is known about the regulatory mechanisms controlling peripheral rods. To begin to investigate this cell fate segregation mechanism, we focused on the EspAC signaling system which controls accumulation of MrpC, a central transcription factor necessary to induce fruiting body formation. Single-cell reporters and in situ confocal microscopy demonstrated that expression of the esp genes is enriched in the peripheral rods. We identified three transcription factors necessary for espAC transcriptional control: MrpC; FruA, a transcription factor that coordinates sporulation within fruiting bodies; and the xenobiotic response element, Xre0228. We demonstrate that MrpC directly activates espA and espC; FruA represses espC, but not espA; and Xre0228 activates espA but represses espC. These genetic interactions fit common network motifs that promote or stabilize phenotypic heterogeneity. We propose a model by which cell fate segregation is directed, stabilized and tuned to environmental conditions.