Signaling by the Notch surface receptor controls cell fate determination in a broad spectrum of tissues. This signaling is triggered by the interaction of the Notch protein with what, so far, have been thought to be transmembrane ligands expressed on adjacent cells. Here biochemical and genetic analyses show that the ligand Delta is cleaved on the surface, releasing an extracellular fragment capable of binding to Notch and acting as an agonist of Notch activity. The ADAM disintegrin metalloprotease Kuzbanian is required for this processing event. These observations raise the possibility that Notch signaling in vivo is modulated by soluble forms of the Notch ligands.