The clathrin heavy chain is a fundamental element in endocytosis and therefore, in the internalization of several cell-surface receptors through which cells interact with their environment. Here we show that the only non-lethal mutant allele of the clathrin heavy chain identified to date in metazoans, the Drosophila Chc(4), involves the substitution of a residue at the knee region of the molecule that impairs clathrin-dependent endocytosis. We have investigated the consequences of this endocytic defect in Drosophila retinal development and found that it produces an inhibition of programmed cell death in the retinal lattice, followed by widespread death of interommatidial pigment cells once retinal development has been completed. Through genetic interactions and transgenic analyses, we show that Chc(4) phenotypes are caused by a Notch receptor gain-of-function, providing a dramatic example of the importance of Notch down-regulation by endocytosis. An increase in Notch signaling is also observed in Drosophila wings in response to the mutant clathrin, suggesting that Notch levels are controlled by clathrin-dependent endocytosis. We discuss the implications of these findings for current models on eye-development and for the role of endocytosis in Notch signaling.