In a genetic screen for mutations that attenuate Notch signaling in the developing Drosophila eye, we isolated rare, gain-of-function alleles of Suppressor of Hairless (Su(H)), the fly homolog of the mammalian C promoter-binding factor 1 (CBF1) gene. Su(H) exhibits numerous allele-specific genetic interactions with Notch as well as with Delta, deltex, and mastermind. In cultured Drosophila cells, the Su(H) protein is sequestered in the cytoplasm when coexpressed with Notch protein and is translocated to the nucleus when Notch binds to its ligand Delta. Cytoplasmic retention of Su(H) requires the intracellular cdc10/ankyrin repeats of Notch, which associate with Su(H) protein in the yeast interaction trap assay. These results indicate that Notch activity may regulate nuclear events by controlling the activity of a DNA-binding protein.