ABSTRACT Genetic analysis in Drosophila has led to the identification of several proteins that mediate cell-cell interactions controlling the fate and proliferation of epithelial cells. These proteins are localized or enriched in the adherens and septate junctions at the apical end of the lateral membranes between cells. The proteins localized or enriched at adherens junctions include Notch, which is important for the cell interactions controlling neuroblast and bristle patterning; Boss and sevenless, which are required for the cell interaction that establishes the R7 photoreceptor cell; and Armadillo, required for the wingless-dependent cell interactions that control segment polarity and imaginai disc patterning. Proteins localized at septate junctions include the product of the tumor suppressor gene dig, which is required for septate junction formation, apical basal cell polarity, and the cell interactions that control proliferation. The results suggest that the cell signalling events important for cell fate determination and for cell proliferation control in epithelia occur at the apical junctions. The migration of the nucleus to the apical surface of the epithelium for mitosis may enable it to interact directly with the junction-associated signalling mechanisms.