Diverse neuronal cell types arise from the lateral neuroblast in the antennal lobe of Drosophila. The authors show that loss of Notch function from the entire lineage during development leads to an absence of local interneurons (LNs) with a concomitant increase in the number of projection neurons (PNs). The presence of the intracellular domain of Notch was observed within the nucleus of newly born neurons within the neuroblast lineage. This leads to the suggestion that Notch acts in a binary fate decision to determine formation of LNs and PNs, resulting in two distinct hemilineages from the single neuroblast. The observation of nuclear Notch in several neuroblast lineages leads us to speculate that this mechanism is widespread during the developing Drosophila brain.