During development of the Drosophila peripheral nervous system, a sensory organ precursor (SOP) cell undergoes rounds of asymmetric divisions to generate four distinct cells of a sensory organ. Numb, a membrane-associated protein, is asymmetrically segregated into one daughter cell during SOP division and acts as an inherited determinant of cell fate. Here, we show that Notch, a transmembrane receptor mediated cell-cell communication, functions as a binary switch in cell fate specification during asymmetric divisions of the SOP and its daughter cells in embryogenesis. Moreover, numb negatively regulates Notch, probably through direct protein-protein interaction that requires the phosphotyrosine-binding (PTB) domain of Numb and either the RAM23 region or the very C-terminal end of Notch. Notch then positively regulates a transcription factor encoded by tramtrack (ttk). This leads to Ttk expression in the daughter cell that does not inherit Numb. Thus, the inherited determinant Numb bestows a bias in the machinery for cell-cell communication to allow the specification of distinct daughter cell fates.