The Notch signalling pathway plays essential roles during the specification of the rostral and caudal somite halves and subsequent segmentation of the paraxial mesoderm. We have re-investigated the role of presenilin 1 (Ps1; encoded by Psen1) during segmentation using newly generated alleles of the Psen1 mutation. In Psen1-deficient mice, proteolytic activation of Notch1 was significantly affected and the expression of several genes involved in the Notch signalling pathway was altered, including Delta-like3, Hes5, lunatic fringe (Lfng) and Mesp2. Thus, Ps1-dependent activation of the Notch pathway is essential for caudal half somite development. We observed defects in Notch signalling in both the caudal and rostral region of the presomitic mesoderm. In the caudal presomitic mesoderm, Ps1 was involved in maintaining the amplitude of cyclic activation of the Notch pathway, as represented by significant reduction of Lfng expression in Psen1-deficient mice. In the rostral presomitic mesoderm, rapid downregulation of the Mesp2 expression in the presumptive caudal half somite depends on Ps1 and is a prerequisite for caudal somite half specification. Chimaera analysis between Psen1-deficient and wild-type cells revealed that condensation of the wild-type cells in the caudal half somite was concordant with the formation of segment boundaries, while mutant and wild-type cells intermingled in the presomitic mesoderm. This implies that periodic activation of the Notch pathway in the presomitic mesoderm is still latent to segregate the presumptive rostral and caudal somite. A transient episode of Mesp2 expression might be needed for Notch activation by Ps1 to confer rostral or caudal properties. In summary, we propose that Ps1 is involved in the functional manifestation of the segmentation clock in the presomitic mesoderm.