During neurogenesis in Drosophila, groups of ectodermal cells are endowed with the capacity to become neuronal precursors. The Notch signaling pathway is required to limit the neuronal potential to a single cell within each group. Loss of genes of the Notch signaling pathway results in a neurogenic phenotype: hyperplasia of the nervous system accompanied by a parallel loss of epidermis. Echinoid (Ed), a cell membrane associated Immunoglobulin C2-type protein, has previously been shown to be a negative regulator of the EGFR pathway during eye and wing vein development. Using in situ hybridization and antibody staining of whole-mount embryos, we show that Ed has a dynamic expression pattern during embryogenesis. Embryonic lethal alleles of ed reveal a role of Ed in restricting neurogenic potential during embryonic neurogenesis, and result in a phenotype similar to that of loss-of-function mutations of Notch signaling pathway genes. In this process Ed interacts closely with the Notch signaling pathway. Loss of ed suppresses the loss of neuronal elements caused by ectopic activation of the Notch signaling pathway. Using a temperature-sensitive allele of ed we show, furthermore, that Ed is required to suppress sensory bristles and for proper wing vein specification during adult development. In these processes also, ed acts in close concert with genes of the Notch signaling pathway. Thus the extra wing vein phenotype of ed is enhanced upon reduction of Delta (Dl) or Enhancer of split [E(spl)] proteins. Overexpression of the membrane-tethered extracellular region of Ed results in a dominant-negative phenotype. This phenotype is suppressed by overexpression of E(spl)m7 and enhanced by overexpression of Dl. Our work establishes a role of Ed during embryonic nervous system development, as well as adult sensory bristle specification and shows that Ed interacts synergistically with the Notch signaling pathway.