During Notch mediated lateral inhibition, interacting cells establish or amplify differences in Notch signalling, which are then translated into distinct cell fate decisions according to the developmental context. In recent years, several mechanisms that increase the signalling capacity of interacting cells have been uncovered (reviewed in Bray, 2006, Le Borgne, 2006, Schweisguth, 2004). However, mechanisms specifically targeted to downregulate receptor activity are also at work during lateral inhibition, contributing decisively to generate definitive differences between interacting cells. In this review, we discuss some of these mechanisms and their relevance for the overall architecture of the Notch pathway. We further highlight the importance of properly terminating Notch activity during cell fate decisions mediated by this pathway.