Notch (N) signaling is used for cell-fate determination in many different developmental contexts. Here, we show that the master control gene for sex determination in Drosophila melanogaster, Sex-lethal (Sxl), negatively regulates the N-signaling pathway in females. In genetic assays, reducing Sxl activity suppresses the phenotypic effects of N mutations, while increasing Sxl activity enhances the effects. Sxl appears to negatively regulate the pathway by reducing N protein accumulation, and higher levels of N are found in Sxl(-) clones than in adjacent wild-type cells. The inhibition of N expression does not depend on the known downstream targets of Sxl; however, we find that Sxl protein can bind to N mRNAs. Finally, our results indicate that downregulation of the N pathway by Sxl contributes to sex-specific differences in morphology and suggest that it may also play an important role in follicle cell specification during oogenesis.