SMRTER (SMRT-related and ecdysone receptor interacting factor) is the Drosophila homologue of the vertebrate proteins SMRT and N-CoR, and forms with them a well-conserved family of transcriptional corepressors. Molecular characterization of SMRT-family proteins in cultured cells has implicated them in a wide range of transcriptional regulatory pathways. However, little is currently known about how this conserved class of transcriptional corepressors regulates the development of particular tissues via specific pathways. In this study, through our characterization of multiple Smrter (Smr) mutant lines, mosaic analysis of a loss-of-function Smr allele, and studies of two independent Smr RNAi fly lines, we report that SMRTER is required for the development of both ovarian follicle cells and the wing. In these two tissues, SMRTER inhibits not only the ecdysone pathway, but also the Notch pathway. We differentiate SMRTER's influence on these two signaling pathways by showing that SMRTER inhibits the Notch pathway, but not the ecdysone pathway, in a spatiotemporally restricted manner. We further confirm the likely involvement of SMRTER in the Notch pathway by demonstrating a direct interaction between SMRTER and Suppressor of Hairless [Su(H)], a DNA-binding transcription factor pivotal in the Notch pathway, and the colocalization of both proteins at many chromosomal regions in salivary glands. Based on our results, we propose that SMRTER regulates the Notch pathway through its association with Su(H), and that overcoming a SMRTER-mediated transcriptional repression barrier may represent a key mechanism used by the Notch pathway to control the precise timing of events and the formation of sharp boundaries between cells in multiple tissues during development.