That's good news for your child's development, but to help her learn to assert herself without turning into a pint-size dictator:
Model good behavior. Check that you're not always issuing edicts like "Pick that up" and "Come here." Instead, say "please" and "thank you" when you make a request. Gently remind her to do the same.
Offer limited choices. Ask if she'dprefer to wear the red sweater or the blue one, say. She'll feel as though she has some power over her day and will be less likely to need to control other things (what you should wear, for instance).
Give in sometimes. While you can't let your child decide when to go to bed or what she'll have for dinner every night, let her have her way when possible. You'll show her that you're listening to what she has to say and that you value her opinion.
Explain yourself. When you aren't able to accommodate your child's wishes, tell her why. You might say that you can't play that game right now, but you will once you've finished the laundry. If her demand is out of the question, give her a specific reason -- it's too dangerous, for instance, or it's too messy.
Keep your cool. When she pushes your buttons, try to remember that "You're not the boss of me" is really "I'd like a choice." And "My way!" simply means "I need to try."
This stage won't last forever: "Most kids outgrow the worst of it by around the age of 5," says Stanley.