Activation of the Notch (N) receptor involves an intracellular proteolytic step triggered by shedding of the extracellular N domain (N-EC) upon ligand interaction. The ligand Dl has been proposed to effect this N-EC shedding by transendocytosing the latter into the signal-emitting cell. We find that Dl endocytosis and N signaling are greatly stimulated by expression of neuralized (neur). neur inactivation suppresses Dl endocytosis, while its overexpression enhances Dl endocytosis and Notch-dependent signaling. We show that neur encodes an intracellular peripheral membrane protein. Its C-terminal RING domain is necessary for Dl accumulation in endosomes, but may be dispensable for Dl signaling. The potent modulatory effect of Neur on Dl activity makes Neur a candidate for establishing signaling asymmetries within cellular equivalence groups.

Notch is the receptor in a signalling pathway that operates in a diverse spectrum of developmental processes. Its ligands (e.g. Serrate) are transmembrane proteins whose signalling competence is regulated by the endocytosis‐promoting E3 ubiquitin ligases, Mindbomb1 and Neuralized. The ligands also inhibit Notch present in the same cell (cis‐inhibition). Here, we identify two conserved motifs in the intracellular domain of Serrate that are required for efficient endocytosis. The first, a dileucine motif, is dispensable for trans‐activation and cis‐inhibition despite the endocytic defect, demonstrating that signalling can be separated from bulk endocytosis. The second, a novel motif, is necessary for interactions with Mindbomb1/Neuralized and is strictly required for Serrate to trans‐activate and internalise efficiently but not for it to inhibit Notch signalling. Cis‐inhibition is compromised when an ER retention signal is added to Serrate, or when the levels of Neuralized are increased, and together these data indicate that cis‐inhibitory interactions occur at the cell surface. The balance of ubiquitinated/unubiquitinated ligand will thus affect the signalling capacity of the cell at several levels.

Lateral inhibition is a pattern refining process that generates single neural precursors from a field of equipotent cells and is mediated via Notch signaling. Of the two Notch ligands Delta and Serrate, only the former was thought to participate in this process. We now show that macrochaete lateral inhibition involves both Delta and Serrate. In this context, Serrate interacts with Neuralized, a ubiquitin ligase that was heretofore thought to act only on Delta. Neuralized physically associates with Serrate and stimulates its endocytosis and signaling activity. We also characterize a mutation in mib1, a Drosophila homolog of mind bomb, another Delta-targeting ubiquitin ligase from zebrafish. Mib1 affects the signaling activity of Delta and Serrate in both lateral inhibition and wing dorsoventral boundary formation. Simultaneous absence of neuralized and mib1 completely abolishes Notch signaling in both aforementioned contexts, making it likely that ubiquitination is a prerequisite for Delta/Serrate signaling.