Cells that occupy the midline of vertebrate embryos arise from a common population of precursors. Several lines of evidence indicate that Delta-Notch signaling regulates specification of midline precursors for different fates. We show that zebrafish midline precursors transiently express lunatic fringe, which encodes a glycosyltransferase that modifies Notch activity in response to its ligands, and that lunatic fringe function is required for Delta-Notch–mediated induction of hypochord cells at the lateral borders of the midline precursor domain. Development Dynamics 228:281–286, 2003. © 2003 Wiley-Liss, Inc.