Notch is the receptor in a signalling pathway that operates in a diverse spectrum of developmental processes. Its ligands (e.g. Serrate) are transmembrane proteins whose signalling competence is regulated by the endocytosis-promoting E3 ubiquitin ligases, Mindbomb1 and Neuralized. The ligands also inhibit Notch present in the same cell (cis-inhibition). Here, we identify two conserved motifs in the intracellular domain of Serrate that are required for efficient endocytosis. The first, a dileucine motif, is dispensable for trans-activation and cis-inhibition despite the endocytic defect, demonstrating that signalling can be separated from bulk endocytosis. The second, a novel motif, is necessary for interactions with Mindbomb1/Neuralized and is strictly required for Serrate to trans-activate and internalise efficiently but not for it to inhibit Notch signalling. Cis-inhibition is compromised when an ER retention signal is added to Serrate, or when the levels of Neuralized are increased, and together these data indicate that cis-inhibitory interactions occur at the cell surface. The balance of ubiquitinated/unubiquitinated ligand will thus affect the signalling capacity of the cell at several levels.