Microfold cells (M cells) are specialized epithelial cells that reside on mucosal surfaces, specifically in nasal associated lymphoid tissue (NALT) and gut associated lymphoid tissue (GALT). M cells are highly efficient at transcytosis, allowing them to transport particles or antigens from their apical surface to their basolateral side for immune surveillance. Despite our understanding of their function, M cell development remains mostly unexplored. This study investigates the important role that both CD137 and Jag1-Notch1 signaling play in M cell development. Notch signaling activates lateral inhibition early in M cell development, preventing cells adjacent to the M cell precursor from differentiating into additional M cells. Notch1 conditional KO mice highlight this inhibitory role, exhibiting increased M cell formation with clustered distributions. Similarly, knocking out the corresponding ligand, Jag1, also results in M cell clustering. However, in contrast to the Notch1 KO mice, Jag1 removal decreases overall M cell numbers, suggesting that it serves a significant role in M cell differentiation. Additionally, previous in vitro research connected CD137 to M cell development; this study expands on this research in vivo, using CD137 KO mice. While CD137 KO mice show normal M cell formation, functional development is impaired, particularly uptake functionality and basolateral pocket morphology. Adoptive-transferred bone marrow chimera mice also exhibit significantly reduced NALT M cell uptake, further demonstrating the importance of CD137 expression for M cell functional development.