Notch is a phylogenetically conserved transmembrane receptor that is required for many aspects of animal development. Upon ligand stimulation, a fragment of Notch is released proteolytically and enters the nucleus to form a complex with the DNA-binding protein CSL (CBF1/Suppressor of Hairless/Lag1) and activate transcription of Notch-CSL target genes. The physical structure of the Notch-CSL complex remains unclear, however, clouding the interpretation of previous efforts to correlate Notch structure and function. We have, therefore, characterized the binding of Drosophila CSL (called Suppressor of Hairless, or Su(H)) to the intracellular domain of Drosophila Notch both in vitro and in vivo. We report the identification of two Su(H) binding regions in Notch. The first is in the juxtamembrane region (the "RAM" domain). The second is just C-terminal to the Notch ankyrin repeats, overlapping or identical to two previously proposed nuclear localization sequences, in a domain we term PPD (potential phosphorylated domain). The ankyrin repeats themselves do not bind to Su(H); however, they substantially enhance binding of Su(H) to the more C-terminal region. Consistent with this picture, removal of either the Ram or PPD binding sites, separately, modestly reduces Notch activity in vivo, whereas removal of both renders Notch severely defective. These results clarify the relationship between Notch and CSL, help to explain the importance of the ankyrin repeats in Notch signaling, and reconcile many apparently contradictory results from previous Notch structure/function studies. Moreover, they suggest a second function for the Notch nuclear localization sequence elements.