putzig is required for cell proliferation and regulates notch activity in Drosophila.

We have identified the gene putzig (pzg) as a key regulator of cell proliferation and of Notch signaling in Drosophila. pzg encodes a Zn-finger protein that was found earlier within a macromolecular complex, including TATA-binding protein-related factor 2 (TRF2)/DNA replication-related element factor (DREF). This complex is involved in core promoter selection, where DREF functions as a transcriptional activator of replication-related genes. Here, we provide the first in vivo evidence that pzg is required for the expression of cell cycle and replication-related genes, and hence for normal developmental growth. Independent of its role in the TRF2/DREF complex, pzg acts as a positive regulator of Notch signaling that may occur by chromatin activation. Down-regulation of pzg activity inhibits Notch target gene activation, whereas Hedgehog (Hh) signal transduction and growth regulation are unaffected. Our findings uncover different modes of operation of pzg during imaginal development of Drosophila, and they provide a novel mechanism of Notch regulation.