We have investigated the functional relationships among three loci that are required for multiple alternative cell fate decisions during adult peripheral neurogenesis in Drosophila: Notch (N), which encodes a transmembrane receptor protein, Suppressor of Hairless [Su(H)], which encodes a DNA-binding transcription factor, and the Enhancer of split gene complex [E(spl)-C], which includes seven transcription units that encode basic helix-loop-helix (bHLH) repressor proteins. We describe several lines of evidence establishing that Su(H) directly activates transcription of E(spl)-C genes in response to N receptor activity. Expression of an activated form of the N receptor leads to elevated and ectopic E(spl)-C transcript accumulation and promoter activity in imaginal discs. We show that the proximal upstream regions of three E(spl)-C genes contain multiple specific binding sites for Su(H). The integrity of these sites, as well as Su(H) gene activity, are required not only for normal levels of expression of E(spl)-C genes in imaginal disc proneural clusters, but also for their transcriptional response to hyperactivity of the N receptor. Our results establish Su(H) as a direct regulatory link between N receptor activity and the expression of E(spl)-C genes, extending the known linear structure of the N cell-cell signaling pathway.