ABSTRACT Serrate-like genes encode transmembrane ligands to Notch receptors and control cell fate decisions during development. In this report, we analyse the regulation of the mouse Serrate-1 gene during embryogenesis. The Serrate-1 gene is expressed from embryonic day 7.5 (E7.5) and expression is often observed at sites of epithelial-mesenchymal interactions, including the developing tooth, where Serrate-1 is first (E11.5) expressed in all cells of the dental epithelium, but not in mesenchyme. A transient upregulation in dental mesenchyme (E12.5-15.5) is correlated with down-regulation of Serrate-1 expression in epithelial cells contacting the mesenchyme, i.e. in the cells destined to become ameloblasts. This expression pattern is reproduced in explants of dental epithelium and mesenchyme in vitro: epithelium induces Serrate-1 expression in mesenchyme, while epithelium in close proximity to this mesenchyme does not express detectable levels of Serrate-1 mRNA, suggesting that downregulation of Serrate-1 expression in preameloblasts is caused by mesenchyme-derived signals. Finally, regulation of Serrate-1 expression differs from that of Notch genes. The Serrate-1 gene is induced in dental mesenchyme by fibroblast growth factor-4, but not by bone morphogenetic proteins, while the converse is true for Notch genes. This indicates that, at least during tooth development, the expression patterns observed for receptors and ligands in the Notch signaling pathway are generated by different induction mechanisms.