Alagille syndrome is a human autosomal dominant developmental disorder characterized by liver, heart, eye, skeletal, craniofacial and kidney abnormalities. Alagille syndrome is caused by mutations in the Jagged 1 (JAG1) gene, which encodes a ligand for Notch family receptors. The majority of JAG1 mutations seen in Alagille syndrome patients are null alleles, suggesting JAG1 haploinsufficiency as a primary cause of this disorder. Mice homozygous for a Jag1 null mutation die during embryogenesis and Jag1/+ heterozygous mice exhibit eye defects but do not exhibit other phenotypes characteristic of Alagille syndrome patients ( Xue, Y., Gao, X., Lindsell, C. E., Norton, C. R., Chang, B., Hicks, C., Gendron-Maguire, M., Rand, E. B., Weinmaster, G. and Gridley, T. (1999) HUM: Mol. Genet. 8, 723-730). Here we report that mice doubly heterozygous for the Jag1 null allele and a Notch2 hypomorphic allele exhibit developmental abnormalities characteristic of Alagille syndrome. Double heterozygous mice exhibit jaundice, growth retardation, impaired differentiation of intrahepatic bile ducts and defects in heart, eye and kidney development. The defects in bile duct epithelial cell differentiation and morphogenesis in the double heterozygous mice are similar to defects in epithelial morphogenesis of Notch pathway mutants in Drosophila, suggesting that a role for the Notch signaling pathway in regulating epithelial morphogenesis has been conserved between insects and mammals. This work also demonstrates that the Notch2 and Jag1 mutations interact to create a more representative mouse model of Alagille syndrome and provides a possible explanation of the variable phenotypic expression observed in Alagille syndrome patients.