Notch signaling controls numerous cell fate decisions during animal development. These typically involve a Notch-mediated switch in transcription of target genes, although the details of this molecular mechanism are poorly understood. Here, we identify dBre1 as a nuclear component required cell autonomously for the expression of Notch target genes in Drosophila development. dBre1 affects the levels of Su(H) in imaginal disc cells, and it stimulates the Su(H)-mediated transcription of a Notch-specific reporter in transfected Drosophila cells. Strikingly, dBre1 mutant clones show much reduced levels of methylated lysine 4 on histone 3 (H3K4m), a chromatin mark that has been implicated in transcriptional activation. Thus, dBre1 is the functional homolog of yeast Bre1p, an E3 ubiquitin ligase required for the monoubiquitination of histone H2B and, indirectly, for H3K4 methylation. Our results indicate that histone modification is critical for the transcription of Notch target genes.