Delta and Notch encode cell surface proteins that function in a wide variety of cell fate specification events during oogenesis, embryogenesis, and metamorphosis in Drosophila melanogaster. Various lines of evidence imply that Delta and Notch proteins function as signal and receptor in cellular interactions required for the partitioning of fates among cells within equivalence groups in many developmental contexts. Molecular and genetic observations provide a framework for the formulation of hypotheses concerning the mechanisms by which the Delta ligand and Notch receptor interact and the Delta-Notch signal is transduced in a manner that can affect the adoption of distinct fates by different cells. In particular, emerging evidence regarding the expression and function of Delta and Notch during development also raise possible alternatives to the currently favored hypothesis that Delta-Notch interactions generate instructive signals that mediate a process termed lateral inhibition.