Singling out of a unique neural precursor from a group of equivalent cells, during Drosophila neurogenesis, involves Notch-mediated lateral signaling. During this process, activation of the Notch signaling pathway leads to repression of neural development. Disruption of this signaling pathway results in the development of an excess of neural cells. The loss of activity of dynamin, which is encoded by the gene shibire and is required for endocytosis, results in a similar phenotype. Here we have investigated the requirement of shibire function for Notch signaling during the segregation of sensory bristles on the notum of the fly. Overexpression of different constitutively active forms of Notch in shibire mutant flies indicates that shibire function is not necessary for transduction of the signal downstream of Notch, even when the receptor is integrated in the plasma membrane. However, when wild-type Notch is activated by its ligand Delta, dynamin is required in both signaling and receiving cells for normal singling out of precursors. This suggests an active role of the signaling cell for ligand-mediated receptor endocytosis in the case of transmembrane ligands. We discuss the possible implications of these results for normal functioning of Notch-mediated lateral signaling.