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The Notch genes encode single-pass transmembrane receptors that transduce the extracellular signals responsible for cell fate determination during several steps of metazoan development. The mechanism by which extracellular signals affect gene transcription and ultimately cell fate decisions is beginning to emerge for the Notch signalling pathway. One paradigm is that ligand binding to Notch triggers a Presenilin1-dependent proteolytic release of the Notch intracellular domain from the membrane, resulting in low amounts of Notch intracellular domain which form a nuclear complex with CBF1/Su(H)/Lag1 to activate transcription of downstream targets. Not all observations clearly support this processing model, and the most rigorous test of it is to block processing in vivo and then determine the ability of unprocessed Notch to signal. Here we report that the phenotypes associated with a single point mutation at the intramembranous processing site of Notch1, Val1,744-->Gly, resemble the null Notch1 phenotype. Our results show that efficient intramembranous processing of Notch1 is indispensable for embryonic viability and proper early embryonic development in vivo.