Notch, LIN-12, and GLP-1 are receptors that mediate a broad range of cell interactions during Drosophila and nematode development. Signaling by these receptors relies on a conserved pathway with three core components: DSL ligand, LNG receptor, and a CSL effector that links the receptor to its transcriptional response. Although key functional regions have been identified in each class of proteins, the mechanism for signal transduction is not yet understood. Diverse regulatory mechanisms influence signaling by the LIN-12/Notch pathway. Inductive signaling relies on the synthesis of ligand and receptor in distinct but neighboring cells. By contrast, lateral signaling leads to the transformation of equivalent cells that express both ligand and receptor into nonequivalent cells that express either ligand or receptor. This transformation appears to rely on regulatory feedback loops within the LIN-12/Notch pathway. In addition, the pathway can be regulated by intrinsic factors that are asymmetrically segregated during cell division or by extrinsic cues via other signaling pathways. Specificity in the pathway does not appear to reside in the particular ligand or receptor used for a given cell-cell interaction. The existence of multiple ligands and receptors may have evolved from the stringent demands placed upon the regulation of genes encoding them.