Notch function is required at the dorsoventral boundary of the developing Drosophila wing for its normal growth and patterning. We find that clones of cells expressing either Notch or its ligands Delta and Serrate in the wing mimic Notch activation at the dorsoventral boundary producing non-autonomous effects on proliferation, and activating expression of the target genes E(spl), wingless and cut. The analysis of these clones reveals several mechanisms important for maintaining and delimiting Notch function at the dorsoventral boundary. First, Notch activation in the wing leads to increased production of Delta and Serrate generating a positive feedback loop that maintains signalling. We propose that during normal development, wingless co-operates with Notch to reinforce this positive feedback and Cut, which is activated by Notch at late stages, acts antagonistically to prevent Delta and Serrate expression. Second, high levels of Delta and Serrate have a dominant negative effect on Notch, so that at late stages Notch can only be activated in cells next to the ligand-producing cells. Thus the combined effects of Notch and its target genes cut and wingless regulate the expression of Notch ligands which restrict Notch activity to the dorsoventral boundary.