The highly conserved NOTCH signaling pathway has many essential functions in the development of diverse cells, tissues and organs from Drosophila to humans, and dysregulated NOTCH signaling contributes to several disorders, including vascular and bone defects, as well as several cancers. Here we describe a novel mechanism of NOTCH regulation by reciprocal inhibition of two NOTCH downstream effectors: Deltex1 and HES1. This mechanism appears to regulate invasion of osteosarcoma cells, as Deltex1 blocks osteosarcoma invasiveness by downregulating NOTCH/HES1 signaling. The inhibitory effect of endogenous Deltex1 on NOTCH signaling is mediated through binding with the intracellular domain of NOTCH and ubiquitination and degradation of NOTCH receptors. Conversely, we show that the NOTCH target gene HES1 causes transcriptional inhibition of Deltex1 by directly binding to the promoter of Deltex1. An HES1 binding site is identified 400 bp upstream of the transcription start site of Deltex1. HES1-mediated repression of Deltex1 requires the C-terminal H3/H4 and WRPW domains of HES1, which associate with the TLE/Groucho corepressors. Taken together, we define a molecular mechanism regulating NOTCH signaling by reciprocal inhibition of the NOTCH target genes HES1 and Deltex1 in mammalian cells. This mechanism may have important clinical implications for targeting NOTCH signaling in osteosarcoma and other cancers.