The airways are conduits that transport atmospheric oxygen to the distal alveolus. Normally, airway mucous cells are rare. However, diseases of the airway are often characterized by mucous metaplasia, in which there are dramatic increases in mucous cell numbers. As the Notch pathway is known to regulate cell fate in many contexts, we misexpressed the active intracellular domain of the mouse Notch1 receptor in lung epithelium. Notch misexpression resulted in an increase in mucous cells and a decrease in ciliated cells in the airway. Similarly, mouse embryonic tracheal explants and adult human airway epithelium treated with Notch agonists displayed increased mucous cell numbers and decreased ciliated cell numbers. Notch antagonists had the opposite effect. Notably, Notch antagonists blocked IL13-induced mucous metaplasia. IL13 has a well-established role as an inflammatory mediator of mucous metaplasia and functions through Stat6-mediated gene transcription. We found that Notch ligands, however, are able to cause mucous metaplasia in Stat6-null cultured trachea, thus identifying a novel pathway that stimulates mucous metaplasia. Notch signaling may therefore play an important role in airway disease and, by extension, Notch antagonists may have therapeutic value. Conversely, in the distal lung, Notch misexpression prevented the differentiation of alveolar cell types. Instead, the distal lung formed cysts composed of cells that were devoid of alveolar markers but that expressed some, but not all, markers of proximal airway epithelium. Occasional distal cystic cells appeared to differentiate into normal proximal airway cells, suggesting that ectopic Notch signaling arrests the normal differentiation of distal lung progenitors before they initiate an alveolar program.