Cell-cell interactions mediated by Notch play critical roles at multiple st
ages of development in both invertebrate and vertebrate species. Three type
s of Notch-dependent processes are illustrated in this review: lateral inhi
bition, binary fate decision following asymmetric cell division and formati
on of organization centers at compartmental boundaries. These last two proc
esses illustrate how Notch activity can be modulated both at the cell surfa
ce and inside the cell. Notch signaling involves the interaction of the rec
eptor with its ligand on an adjacent cell. This interaction appears to trig
ger an intracellular proteolytic cleavage that releases intracellular domai
n of Notch. The activated form of the receptor is believed to enter the nuc
leus and promote transcription by interacting with the Suppressor of Hairle
ss DNA-binding protein. The direct read-out of this signaling event is the
transcriptional activation of Notch target-genes.