In Notch signaling, cell-bound ligands activate Notch receptors on juxtaposed cells, but the relationship between ligand endocytosis, ubiquitylation and ligand-receptor interaction remains poorly understood. To study the specific role of ligand-receptor interaction, we identified a missense mutant of the Notch ligand Jagged1 (Nodder, Ndr) that failed to interact with Notch receptors, but retained a cellular distribution that was similar to wild-type Jagged1 (Jagged1(WT)) in the absence of active Notch signaling. Both Jagged1(WT) and Jagged1(Ndr) interacted with the E3 ubiquitin ligase Mind bomb, but only Jagged1(WT) showed enhanced ubiquitylation after co-culture with cells expressing Notch receptor. Cells expressing Jagged1(WT), but not Jagged1(Ndr), trans-endocytosed the Notch extracellular domain (NECD) into the ligand-expressing cell, and NECD colocalized with Jagged1(WT) in early endosomes, multivesicular bodies and lysosomes, suggesting that NECD is routed through the endocytic degradation pathway. When coexpressed in the same cell, Jagged1(Ndr) did not exert a dominant-negative effect over Jagged1(WT) in terms of receptor activation. Finally, in Jag1(Ndr/Ndr) mice, the ligand was largely accumulated at the cell surface, indicating that engagement of the Notch receptor is important for ligand internalization in vivo. In conclusion, the interaction-dead Jagged1(Ndr) ligand provides new insights into the specific role of receptor-ligand interaction in the intracellular trafficking of Notch ligands.