Lateral inhibition mediated by Delta/Notch (Dl/N) signaling is used throughout development to limit the number of initially equivalent cells that adopt a particular fate. Although adjacent cells express both Dl ligand and N receptor, signaling between them ultimately occurs in only one direction. Classically, this has been explained entirely by feedback: activated N can downregulate Dl, amplifying even slight asymmetries in the Dl or N activities of adjacent cells. Here, however, we present an example of lateral inhibition in which unidirectional signaling depends instead on Dl's ability to inhibit N within the same cell, a phenomenon known as cis-inhibition. By genetically manipulating individual R1/R6/R7 photoreceptor precursors in the Drosophila eye, we show that loss of Dl-mediated cis-inhibition reverses the direction of lateral signaling. Based on our finding that Dl in R1/R6s requires endocytosis to trans-activate but not to cis-inhibit N, we reexamine previously published data from other examples of lateral inhibition. We conclude that cis-inhibition generally influences the direction of Dl/N signaling and should therefore be included in standard models of lateral inhibition.