The Notch pathway is a highly conserved and ubiquitous signaling system that functions in determining a diverse array of cell fates and regulates many cellular processes during embryonic development and throughout adulthood. Links to cancer, stroke and Alzheimer's disease underscore the need to define the molecular basis of Notch activation. Notch signaling is induced through direct cell-cell interactions that promote receptor activation following engagement with a membrane-bound Delta, Serrate, Lag-2 (DSL) ligand on adjacent cells. Cells take on distinct fates because Notch signaling is consistently activated in only one of the two interacting cells, highlighting the importance of establishing and maintaining signaling polarity. Studies in flies and worms have identified positive and negative transcriptional feedback mechanisms that amplify small differences in Notch and DSL ligand expression to bias which cells send or receive signals. However, endocytosis by signal-sending and signal-receiving cells also appears critical for directing and regulating Notch activation. In particular, endocytosis and membrane trafficking of DSL ligands, Notch and modulators can determine the competence of cells to send or receive signals that ensure reproducibility in generating cell types regulated by Notch signaling.