The Lin12/Notch receptors regulate cell fate during embryogenesis by activating the expression of downstream target genes. These receptors signal via their intracellular domain (ICD), which is released from the plasma membrane by proteolytic processing and associates in the nucleus with the CSL family of DNA-binding proteins to form a transcriptional activator. How the CSL/ICD complex activates transcription and how this complex is regulated during development remains poorly understood. Here we describe Nrarp as a new intracellular component of the Notch signaling pathway in Xenopus embryos. Nrarp is a member of the Delta-Notch synexpression group and encodes a small protein containing two ankyrin repeats. Nrarp expression is activated in Xenopus embryos by the CSL-dependent Notch pathway. Conversely, overexpression of Nrarp in embryos blocks Notch signaling and inhibits the activation of Notch target genes by ICD. We show that Nrarp forms a ternary complex with the ICD of XNotch1 and the CSL protein XSu(H) and that in embryos Nrarp promotes the loss of ICD. By down-regulating ICD levels, Nrarp could function as a negative feedback regulator of Notch signaling that attenuates ICD-mediated transcription.