FBW7 is a crucial component of an SCF-type E3 ubiquitin ligase, which mediates 
degradation of an array of different target proteins. The Fbw7 locus comprises 
three different isoforms, each with its own promoter and each suspected to have 
a distinct set of substrates. Most FBW7 targets have important functions in 
developmental processes and oncogenesis, including Notch proteins, which are 
functionally important substrates of SCF(Fbw7). Notch signalling controls a 
plethora of cell differentiation decisions in a wide range of species. A 
prominent role of this signalling pathway is that of mediating lateral 
inhibition, a process where exchange of signals that repress Notch ligand 
production amplifies initial differences in Notch activation levels between 
neighbouring cells, resulting in unequal cell differentiation decisions. Here we 
show that the downstream Notch signalling effector HES5 directly represses 
transcription of the E3 ligase Fbw7β, thereby directly bearing on the process of 
lateral inhibition. Fbw7(Δ/+) heterozygous mice showed haploinsufficiency for 
Notch degradation causing impaired intestinal progenitor cell and neural stem 
cell differentiation. Notably, concomitant inactivation of Hes5 rescued both 
phenotypes and restored normal stem cell differentiation potential. In silico 
modelling suggests that the NICD/HES5/FBW7β positive feedback loop underlies 
Fbw7 haploinsufficiency. Thus repression of Fbw7β transcription by Notch 
signalling is an essential mechanism that is coupled to and required for the 
correct specification of cell fates induced by lateral inhibition.