The development of multicellular organisms relies on an intricate choreography of intercellular communication events that pattern the embryo and coordinate the formation of tissues and organs. It is therefore not surprising that developmental biology, especially using genetic model organisms, has contributed significantly to the discovery and functional dissection of the associated signal-transduction cascades. At the same time, biophysical, biochemical, and cell biological approaches have provided us with insights into the underlying cell biological machinery. Here we focus on how endocytic trafficking of signaling components (e.g., ligands or receptors) controls the generation, propagation, modulation, reception, and interpretation of developmental signals. A comprehensive enumeration of the links between endocytosis and signal transduction would exceed the limits of this review. We will instead use examples from different developmental pathways to conceptually illustrate the various functions provided by endocytic processes during key steps of intercellular signaling.