The Delta protein is a single-pass transmembrane ligand for the Notch family of receptors. Delta binding to Notch invokes regulated intramembrane proteolysis and nuclear translocation of the Notch intracellular domain. Delta is proteolytically processed at two sites, Ala(581) and Ala(593) in the juxtamembrane and transmembrane domains, respectively (Mishra-Gorur, K., Rand, M. D., Perez-Villamil, B., and Artavanis-Tsakonas, S. (2002) J. Cell Biol. 159, 313-324). Controversy over the role of Delta processing in propagating Notch signals has stemmed from conflicting reports on the activity or inactivity of soluble extracellular domain products of Delta. We have examined Delta proteolysis in greater detail and report that Delta undergoes three proteolytic cleavages in the region of the juxtamembrane and transmembrane domains. Only one of these cleavages, analogous to cleavage at Ala(581), is dependent on the Kuzbanian ADAM metalloprotease. The two additional cleavages correspond to the previously described cleavage at Ala(593) and a novel unidentified site within or close to the transmembrane domain. Delta processing is up-regulated in co-cultures with Notch-expressing cells and is similarly induced by p-aminophenylmercuric acetate, a well documented activator of metalloproteases. Furthermore, expression of a truncated intracellular isoform of Delta shows prominent nuclear localization. Altogether, these data demonstrate a role for Notch in inducing Delta proteolysis and implicate a nuclear function for Delta, consistent with a model of bi-directional signaling through Notch-Delta interactions.