JAGGED1 is a member of the Delta/Serrate/Lag-2 (DSL) family of proteins that are cell-bound ligands for Notch receptors. Initiation of Notch signaling occurs through a series of proteolytic events upon the binding of Notch to a DSL protein presented on neighboring cells. Whether DSL proteins themselves are capable of initiating an intrinsic signaling mechanism within the cell they are expressed is not known. Aberrant misexpression of JAGGED1 and DELTA1 has been documented in several human tumors; however, the mechanism by which misexpression of JAGGED1 contributes to oncogenesis has not been elucidated. We report that expression of human JAGGED1 transforms RKE cells in culture, therefore providing a model system to elucidate the function of DSL proteins. JAGGED1-mediated transformation occurs in a dose-dependent manner and requires a PDZ-ligand at the C terminus. Mutation of the PDZ-ligand did not affect the ability of JAGGED1 to initiate Notch signaling in neighboring cells. However, the PDZ-ligand is required for changes in the expression of JAGGED1 target genes and transcriptional activation of luciferase reporter constructs. Our data indicate the existence of a novel PDZ-dependent signaling pathway intrinsic to JAGGED1. We propose a bi-directional signaling model such that DSL proteins may have two distinct functions: to initiate Notch signaling in a neighboring cell and to initiate a PDZ-dependent signaling mechanism in the DSL-expressing cell. Moreover, we conclude that this intrinsic signaling mechanism of JAGGED1 may partly provide a link between aberrant misexpression of JAGGED1 and tumorigenesis.