DURING neurogenesis in Drosophila, groups of equipotential, neurally competent cells choose between epidermal and neural fates^1–4. Notch, a phylogenetically conserved transmembrane protein^5–9, may act as a receptor^4,10 in a lateral signalling pathway in which a single neural precursor is chosen from each group and the neural fate of the other cells is inhibited, causing them to differentiate into epidermis^11–13. Possible intracellular transduction events mediating signals from Notch are, however, unknown, shaggy is also required for the lateral signal^4,14 and encodes serine/threonine protein kinases^15,16 with homology to the glycogen synthase kinase-3 (GSK-3) enzymes¹⁷ that act in signal transduction pathways in vertebrates¹⁷. We report here that, in transgenic flies, GSK-3/β can substitute for shaggy, and we also present a study of epistatic relationships between shaggy and gain and loss of function alleles of Notch. The results indicate that shaggy/GSK-3 is part of a signalling pathway downstream of Notch