The Notch signaling pathway controls cell fate choices at multiple steps during cell lineage progression. To produce the cell fate choice appropriate for a particular stage in the cell lineage, Notch signaling needs to interpret the cell context information for each stage and convert it into the appropriate cell fate instruction. The molecular basis for this temporal context-dependent Notch signaling output is poorly understood, and to study this, we have engineered a mouse embryonic stem (ES) cell line, in which short pulses of activated Notch can be produced at different stages of in vitro neural differentiation. Activation of Notch signaling for 6. h specifically at day 3 during neural induction in the ES cells led to significantly enhanced cell proliferation, accompanied by Notch-mediated activation of cyclin D1 expression. A reduction of cyclin-D1-expressing cells in the developing CNS of Notch signaling-deficient mouse embryos was also observed. Expression of a dominant negative form of cyclin D1 in the ES cells abrogated the Notch-induced proliferative response, and, conversely, a constitutively active form of cyclin D1 mimicked the effect of Notch on cell proliferation. In conclusion, the data define a novel temporal context-dependent function of Notch and a critical role for cyclin D1 in the Notch-induced proliferation in ES cells.