During Drosophila neurogenesis, glial differentiation depends on the expression of glial cells missing (gcm). Understanding how glial fate is achieved thus requires knowledge of the temporal and spatial control mechanisms directing gcm expression. A recent report showed that in the adult bristle lineage, gcm expression is negatively regulated by Notch signaling ( Van De Bor, V. and Giangrande, A. (2001). Development 128, 1381-1390). Here we show that the effect of Notch activation on gliogenesis is context-dependent. In the dorsal bipolar dendritic (dbd) sensory lineage in the embryonic peripheral nervous system (PNS), asymmetric cell division of the dbd precursor produces a neuron and a glial cell, where gcm expression is activated in the glial daughter. Within the dbd lineage, Notch is specifically activated in one of the daughter cells and is required for gcm expression and a glial fate. Thus Notch activity has opposite consequences on gcm expression in two PNS lineages. Ectopic Notch activation can direct gliogenesis in a subset of embryonic PNS lineages, suggesting that Notch-dependent gliogenesis is supported in certain developmental contexts. We present evidence that POU-domain protein Nubbin/PDM-1 is one of the factors that provide such context.