During neurogenesis, conserved tissue-specific proneural factors establish a cell's competence to take on neural fate from within a field of unspecified cells. Proneural genes encode basic helix-loop-helix transcription factors that promote the expression of 'core' and subtype-specific target genes. Target genes include both pan-neuronal genes and genes that aid in the process of refinement, known as lateral inhibition. In this process, proneural gene expression is increased in the neural progenitor while simultaneously down-regulated in the surrounding cells, in a Notch signalling-dependent manner. Here, we identify nemo (nmo) as a target of members of both Drosophila Atonal and Achaete-Scute proneural factor families and find that mammalian proneural homologs induce Nemo-like-kinase (Nlk) expression in cell culture. We find that nmo loss of function leads to reduced expression of Notch targets and to perturbations in Notch-mediated lateral inhibition. Furthermore, Notch hyperactivity can compensate for nmo loss in the Drosophila eye. Thus nmo promotes Notch-mediated lateral inhibition downstream of proneural factors during neurogenesis.