In development, lymphatic endothelial cells originate within veins and differentiate via a process requiring Prox1. Notch signaling regulates cell-fate decisions, and expression studies suggested that Jag1/Notch1 signaling functions in veins during lymphatic endothelial specification. Using an inducible lymphatic endothelial Prox1CreER^T2 driver, Notch signaling was suppressed by deleting Notch1 or expressing dominant-negative Mastermind-like in Prox1+ endothelial cells. Either loss of Notch1 or reduced Notch signaling increased Prox1+ lymphatic endothelial progenitor cell numbers in the veins, leading to incomplete separation of venous and lymphatic vessels. Notch loss of function resulted in excessive Prox1+ lymphatic cells emerging from the cardinal vein and significant lymphatic overgrowth. Moreover, loss of one allele of Notch1 in Prox1 heterozygous mice rescued embryonic lethality due to Prox1 haploinsufficiency and significantly increased Prox1+ lymphatic endothelial progenitor cell numbers. Expression of a constitutively active Notch1 protein in Prox1+ cells suppressed endothelial Prox1 from E9.75 to E13.5, resulting in misspecified lymphatic endothelial cells based upon reduced expression of podoplanin, LYVE1 and VEGFR3. Notch activation resulted in the appearance of blood endothelial cells in peripheral lymphatic vessels. Activation of Notch signaling in the venous endothelium at E10.5 did not arterialize the cardinal vein, suggesting that Notch can no longer promote arterialization in the cardinal vein during this developmental stage. We report a novel role for Notch1 in limiting the number of lymphatic endothelial cells that differentiate from the veins to assure proper lymphatic specification.