Notch-mediated cell-cell communication regulates numerous developmental processes and cell fate decisions. Through a mosaic genetic screen in Drosophila melanogaster, we identified a role in Notch signaling for a conserved thiol oxidase, endoplasmic reticulum (ER) oxidoreductin 1-like (Ero1L). Although Ero1L is reported to play a widespread role in protein folding in yeast, in flies Ero1L mutant clones show specific defects in lateral inhibition and inductive signaling, two characteristic processes regulated by Notch signaling. Ero1L mutant cells accumulate high levels of Notch protein in the ER and induce the unfolded protein response, suggesting that Notch is misfolded and fails to be exported from the ER. Biochemical assays demonstrate that Ero1L is required for formation of disulfide bonds of three Lin12-Notch repeats (LNRs) present in the extracellular domain of Notch. These LNRs are unique to the Notch family of proteins. Therefore, we have uncovered an unexpected requirement for Ero1L in the maturation of the Notch receptor.