Notch receptors participate in a highly conserved signaling pathway that regulates morphogenesis in multicellular animals. Maturation of Notch receptors requires the proteolytic cleavage of a single precursor polypeptide to produce a heterodimer composed of a ligand-binding extracellular domain (N(EC)) and a single-pass transmembrane signaling domain (N(TM)). Notch signaling has been correlated with additional ligand-induced proteolytic cleavages, as well as with nuclear translocation of the intracellular portion of N(TM) (N(ICD)). In the current work, we show that the N(EC) and N(TM) subunits of Drosophila Notch and human Notch1 (hN1) interact noncovalently. N(EC)-N(TM) interaction was disrupted by 0.1% sodium dodecyl sulfate or divalent cation chelators such as EDTA, and stabilized by millimolar Ca(2+). Deletion of the Ca(2+)-binding Lin12-Notch (LN) repeats from the N(EC) subunit resulted in spontaneous shedding of N(EC) into conditioned medium, implying that the LN repeats are important in maintaining the interaction of N(EC) and N(TM). The functional consequences of EDTA-induced N(EC) dissociation were studied by using hN1-expressing NIH 3T3 cells. Treatment of these cells for 10 to 15 min with 0.5 to 10 mM EDTA resulted in the rapid shedding of N(EC), the transient appearance of a polypeptide of the expected size of N(ICD), increased intranuclear anti-Notch1 staining, and the transient activation of an Notch-sensitive reporter gene. EDTA treatment of HeLa cells expressing endogenous Notch1 also stimulated reporter gene activity to a degree equivalent to that resulting from exposure of the cells to the ligand Delta1. These findings indicate that receptor activation can occur as a consequence of N(EC) dissociation, which relieves inhibition of the intrinsically active N(TM) subunit.