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Contact-dependent cell communication has the potential to generate elaborate cell patterns, and this occurs in vivo. We used the Delta-Notch signaling system, consisting of the ligand Delta and the receptor Notch, to construct a positive feedback loop between adjacent cells to generate a propagating signal in cultured cells. To amplify the responses of Notch to Delta, we created a cell-cell positive feedback loop using an engineered transcriptional cascade and a Notch positive regulator, Lunatic fringe. We used mathematical modeling to determine the appropriate amount of amplification to enable the induction of Delta to propagate from one cell to its neighboring cells, which generated bistability within the local cell populations and resulted in discrete groups of cells that were either positive or negative for Delta. These results demonstrate the sufficiency of the cell-cell positive feedback loop to generate signal propagation and cell population–level bistability. This study represents a step in engineering more elaborate cell patterns in mammalian cells.