In human interfollicular epidermis, stem cell clusters express high levels of the Notch ligand Delta1. Delta1 stimulates neighbouring cells to differentiate and also promotes stem cell clustering. Although Notch signalling is known to stimulate epidermal differentiation, little is known about the mechanism by which Delta1 promotes epidermal cell cohesiveness. This is an important issue, because the location of stem cells determines the local microenvironmental signals they receive. We now show that mutation of the Delta1 PDZ-binding domain abolishes Delta1-mediated keratinocyte cohesiveness, stimulates Notch transcriptional activity and promotes epidermal differentiation. A yeast two-hybrid screen revealed that Delta1 binds to the adaptor protein syntenin - an interaction dependent on the Delta1 PDZ-binding domain. Syntenin, like Delta1, is upregulated in the stem cell clusters of human interfollicular epidermis. Knockdown of syntenin in cells overexpressing full-length Delta1 had the same effects on Notch signalling, epidermal differentiation and adhesion as overexpressing Delta1 with a mutated PDZ-binding domain. Syntenin has previously been reported to regulate membrane traffic, and mutation of the Delta1 PDZ-binding domain or knockdown of syntenin led to rapid internalisation of Delta1. We propose that syntenin binding to Delta1 plays a dual role in promoting intercellular adhesion and regulating Notch signalling.