The C. elegans lag-2 gene is required for several cell-cell interactions that rely on the receptors GLP-1 and LIN-12. In this paper, we report that lag-2 encodes a putative membrane protein with sequence similarity to Drosophila Delta, a proposed ligand for the Notch receptor. Furthermore, we show that the lag-2 promoter drives expression of a reporter protein in the signaling distal tip cell (DTC) of the DTC/germline interaction. By in situ hybridization, we have found that endogenous lag-2 mRNA is present in the DTC but not the germ line. One fusion protein, called LAG-2::beta-gal(intra), rescues a lag-2 null mutant and can be detected in both DTC and germ line. Taking these results together, we propose that lag-2 may encode a signaling ligand for GLP-1/LIN-12 and that the entire LAG-2 protein may be taken up into the receiving cell during induction by GLP-1 and lateral signaling by LIN-12.