The ebi gene of Drosophila melanogaster has been implicated in diverse signalling pathways, cellular functions and developmental processes. However, a thorough genetic analysis of this gene has been lacking and the true extent of its biological roles is unclear. Here, we characterize eleven ebi mutations and find that ebi has a novel role in promoting growth of the wing imaginal disc: viable combinations of mutant alleles give rise to adults with small wings. Wing discs with reduced EBI levels are correspondingly small and exhibit down-regulation of Notch target genes. Furthermore, we show that EBI colocalizes on polytene chromosomes with Smrter (SMR), a transcriptional corepressor, and Suppressor of Hairless (SU(H)), the primary transcription factor involved in Notch signalling. Interestingly, the mammalian orthologs of ebi, transducin β-like 1 (TBL1) and TBL-related 1 (TBLR1), function as corepressor/coactivator exchange factors and are required for transcriptional activation of Notch target genes. We hypothesize that EBI acts to activate (de-repress) transcription of Notch target genes important for Drosophila wing growth by functioning as a corepressor/coactivator exchange factor for SU(H).