The view that only the production and deposition of Abeta plays a decisive role in Alzheimer's disease has been challenged by recent evidence from different model systems, which attribute numerous functions to the amyloid precursor protein (APP). To investigate the potential cellular functions of APP and its paralogs, we use transgenic Drosophila as a model. Upon overexpression of the APP-family members, transformations of cell fates during the development of the peripheral nervous system were observed. Genetic analysis showed that APP, APLP1 and APLP2 induce Notch gain-of-function phenotypes, identified Numb as a potential target and provided evidence for a direct involvement of Disabled and Neurotactin in the induction of the phenotypes. The severity of the induced phenotypes not only depended on the dosage and the particular APP-family member but also on particular domains of the molecules. Studies with Drosophila APPL confirmed the results obtained with human proteins and the analysis of flies mutant for the appl gene further supports an involvement of APP-family members in neuronal development and a crosstalk between the APP family and Notch.