Although there is accumulated evidence of a role for Notch in the developing lung, it is still unclear how disruption of Notch signaling affects lung progenitor cell fate and differentiation events in the airway epithelium. To address this issue, we inactivated Notch signaling conditionally in the endoderm using a Shh-Cre deleter mouse line and mice carrying floxed alleles of the Pofut1 gene, which encodes an O-fucosyltransferase essential for Notch-ligand binding. We also took the same conditional approach to inactivate expression of Rbpjk, which encodes the transcriptional effector of canonical Notch signaling. Strikingly, these mutants showed an almost identical lung phenotype characterized by an absence of secretory Clara cells without evidence of cell death, and showed airways populated essentially by ciliated cells, with an increase in neuroendocrine cells. This phenotype could be further replicated in cultured wild-type lungs by disrupting Notch signaling with a gamma-secretase inhibitor. Our data suggest that Notch acts when commitment to a ciliated or non-ciliated cell fate occurs in proximal progenitors, silencing the ciliated program in the cells that will continue to expand and differentiate into secretory cells. This mechanism may be crucial to define the balance of differentiated cell profiles in different generations of the developing airways. It might also be relevant to mediate the metaplastic changes in the respiratory epithelium that occur in pathological conditions, such as asthma and chronic obstructive pulmonary disease.