Heterozygous mutations in JAGGED1, encoding a single-pass transmembrane ligand for the Notch receptors, cause Alagille syndrome (AGS), a polymalformative disorder affecting the liver, heart, eyes and skeleton and characterized by a peculiar facies. Most of the JAGGED1 mutations generate premature termination codons, and as a result, two pathogenic mechanisms causing AGS have been proposed: haploinsufficiency or a dominant-negative effect of putative truncated proteins. To determine whether missense or protein-truncating mutations in JAGGED1 can lead to the synthesis and function of abnormal proteins, we performed cell culture experiments. We showed that human JAGGED1 undergoes a metalloprotease-dependent cleavage resulting in the shedding of its extracellular domain and that this domain seems able to fulfill a biological function in vitro, probably by antagonizing Notch signaling. Moreover, the soluble form of JAGGED1 was able to compete with the transmembrane ligand. Mutant proteins with missense or nonsense mutations were synthesized and gave rise to a chord-like phenotype and a migration defect when expressed by stably transfected cells. These chord-like structures were similar to the phenotype exhibited by fibroblasts isolated from a fetus with a protein-truncating mutation. Results obtained from Notch signaling inhibition and Notch reporter assays showed that this chord-like phenotype, exhibited by mutant JAGGED1 transfectants, may result from an inhibitory effect on Notch signaling. Altogether, our results favor a dominant-negative mechanism of some JAGGED1 mutations in AGS.