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Someone here might remember about a year or two back a series of posts I made here about doing toon shading in Cycles. Of course, it never went anywhere and the end result was pretty ugly, but for anyone who may care and not know themselves already, I figured out a much better, simpler way to do it. I don't know if this is well known or not, or a recent addition, but I figured I'd post it because it's news to me and I had to figure it out myself(and because a quick Google search shows nothing better than what was there last time).

This is just a demo to show it to anyone interested. The point is simply to show the sharp red and green division(intended to represent light and shadow colors) on the face.

It's pretty simple. Just copy the setup in the picture if you want to try it. Replace red and green with whatever color you want, treat the object in the Texture Coordinate node as your light(or make it an actual light).

Note that this is pretty much a directional, infinite-distance lighting technique and isn't going to allow self-shadow either. There might be other nodes you can use for that, but I haven't found one yet.

A couple of things:
1. I'm using the Emission node but if you don't mind getting ambient occlusion in there AO nodes would probably work faster.
2. Why would you want to use Cycles for this? The primary reason would be GPU rendering, I guess.
3. Why wouldn't you just use the compositor? Because it's convenient to have it work in the viewport, I suppose.

Apologies if this is old news now.