In Drosophila imaginal discs, the function of the Hairless (H) gene is required at multiple steps during the development of adult sensory organs. Here we report the results of a series of experiments designed to investigate the in vivo role of H in sensory organ precursor (SOP) cell specification. We show that the proneural cluster pattern of proneural gene expression and of transcriptional activation by proneural proteins is established normally in the absence of H activity. By contrast, single cells with the high levels of achaete, scabrous, and neuralized expression characteristic of SOPs almost always fail to appear in H mutant proneural clusters. These results indicate that H is required for a relatively late step in the development of the proneural cluster, namely, the stable commitment of a single cell to the SOP cell fate. We also show that expression of an activated form of the Notch receptor leads to bristle loss with the same cellular basis--failure of SOP determination--as loss of H function and that simultaneous overexpression of H suppresses this effect. Finally, we demonstrate by epistasis experiments that the failure of stable commitment to the SOP fate in H null mutants requires the activity of the genes of the Enhancer of split complex, including groucho. Our results indicate that H promotes SOP determination by antagonizing the activity of the Notch pathway in this cell, thereby protecting it from inhibitory signaling by its neighbors in the proneural cluster. We propose a simple threshold model in which the principal role of H in SOP specification is to translate a quantitative difference in the activity of the Notch pathway (in the SOP versus the non-SOP cells) into a stable binary cell fate decision.