Specification of unequal daughter cell fates in the Drosophila external sense organ lineage requires asymmetric localization of the intrinsic determinant Numb as well as cell-cell interactions mediated by the Delta ligand and Notch receptor. Previous genetic studies indicated that numb acts upstream of Notch, and biochemical studies revealed that Numb can bind Notch. For a functional assay of the action of Numb on Notch signaling, we expressed these proteins in cultured Drosophila cells and used nuclear translocation of Suppressor of Hairless [Su(H)] as a reporter for Notch activity. We found that Numb interfered with the ability of Notch to cause nuclear translocation of Su(H); both the C-terminal half of the phosphotyrosine binding domain and the C terminus of Numb are required to inhibit Notch. Overexpression of Numb during wing development, which is sensitive to Notch dosage, revealed that Numb is also able to inhibit the Notch receptor in vivo. In the external sense organ lineage, the phosphotyrosine binding domain of Numb was found to be essential for the function but not for asymmetric localization of Numb. Our results suggest that Numb determines daughter cell fates in the external sense organ lineage by inhibiting Notch signaling.