Interaction of Notch receptors with Delta- and Serrate-type ligands is an evolutionarily conserved mechanism that mediates direct communication between adjacent cells and thereby regulates multiple developmental processes. Posttranslational modifications of both receptors and ligands are pivotal for normal Notch pathway function. We have identified by mass spectrometric analysis two serine and one threonine phosphorylation sites in the intracellular domain of the mouse Notch ligand DLL1. Phosphorylation requires cell membrane association of DLL1 and occurs sequentially at the two serine residues. Phosphorylation of one serine residue most likely by protein kinase B primes phosphorylation of the other serine. A DLL1 variant, in which all three identified phosphorylated serine/threonine residues are mutated to alanine and valine, was more stable than wild-type DLL1 but had reduced relative levels on the cell surface and was more effectively cleaved in the extracellular domain. In addition, the mutant variant activated Notch1 significantly less efficient than wild-type DLL1 in a coculture assay in vitro. Mice, however, whose endogenous DLL1 was replaced with the phosphorylation-deficient triple mutant developed normally, suggesting compensatory mechanisms under physiological conditions in vivo.