During the last decade, many of the factors and mechanisms controlling membrane and protein trafficking in general and endocytic trafficking in particular have been uncovered. We have a detailed understanding of the different endocytic trafficking steps: plasma membrane budding, endocytic vesicle motility and fusion with the endosome, recycling, transcytosis and lysosomal degradation. The kinetics and trafficking pathway of many signaling receptors and the relevance of endocytic trafficking during signaling in many mammalian cultured cells are also well understood. However, only in recent years has the role of endocytic trafficking during cell-to-cell communication during development, i.e. during patterning, induction and lateral inhibition, begun to be explored. The contribution of Drosophila developmental genetics and cell biology has been fundamental in elucidating the essential role of endocytosis during these processes. Reviewed here are some of the recent developments on the role of endocytic trafficking during long- and short-range signaling and during lateral inhibition.