Notch signaling blocks differentiation of 3T3-L1 preadipocytes and this can be mimicked by constitutive expression of the Notch target gene Hes-1. Although considered initially to function only as a repressor, recent evidence indicates that Hes-1 can also activate transcription. We show here that the domains of Hes-1 needed to block adipogenesis coincide with those necessary for transcriptional repression. HRT1, another bHLH protein and potential Hes-1 partner, was also induced by Notch in 3T3-L1 cells, but did not block adipogenesis, suggesting that Hes-1 functions primarily as a homodimer or possibly as a heterodimer with an unknown partner. Purification of Hes-1 identified the Groucho/TLE family of co-repressors as the only significant Hes-1 interacting proteins in vivo. An evaluation of global gene expression in preadipocytes identified 200 Hes-1 responsive genes comprising roughly equal numbers of up-regulated and down-regulated genes. However, promoter analyses indicated that the down-regulated genes were significantly more likely to contain Hes-1 binding sites, indicating that Hes-1 is more likely to repress transcription of its direct targets. We conclude that Notch most likely blocks adipogenesis through the induction of Hes-1 homodimers, which repress transcription of key target genes.