Fe65 is a highly conserved adaptor protein that interacts with several binding partners. Fe65 binds proteins to mediate various cellular processes. But the interacting partner and the regulatory mechanisms controlled by Fe65 are largely unknown. In this study, we found that Fe65 interacts with the C-terminus of Jagged1. Furthermore, Fe65 negatively regulates AP1-mediated Jagged1 intercellular domain transactivation in a Tip60-independent manner. We found that Fe65 triggers the degradation of Jagged1, but not the Jagged1 intracellular domain (JICD), through both proteasome and lysosome pathways. We also showed that Fe65 promotes recruitment of the E3 ligase Neuralized-like 1 (Neurl1) to membrane-tethered Jagged1 and monoubiquitination ofJagged1. These three proteins form a stable trimeric complex, thereby decreasing Jagged1 targeting by ubiquitin-mediated degradation. Consequently, Jagged1 is a novel binding partner of Fe65, and Fe65 may act as a novel effector of Jagged1 signaling.