Here, we review recent studies that suggest that Notch signaling has two roles during neural crest development: first in establishing the neural crest domain within the ectoderm via lateral induction and subsequently in diversifying the fates of cells that arise from the neural crest via lateral inhibition. The first of these roles, specification of neural crest via lateral induction, has been explored primarily in the cranial neural folds from which the cranial neural crest arises. Evidence for such a role has thus far only been obtained from chick and frog; results from these two species differ, but share the feature that Notch signaling regulates genes that are expressed by cranial neural crest through effects on expression of Bmp family members. The second of these roles, diversification of neural crest progeny via lateral inhibition, has been identified thus far only in trunk neural crest. Evidence from several species suggests that Notch-mediated lateral inhibition functions in multiple episodes in this context, in each case inhibiting neurogenesis. In the 'standard' mode of lateral inhibition, Notch promotes proliferation and in the 'instructive' mode, it promotes specific secondary fates, including cell death or glial differentiation. We raise the possibility that a single molecular mechanism, inhibition of so-called proneural bHLH genes, underlies both modes of lateral inhibition mediated by Notch signaling.