Notch is a major factor mediating interaction between hematopoietic progenitor cells (HPCs) and bone marrow stroma (BMS). However its contribution to dendritic cell (DC) differentiation is controversial. We found that main Notch ligands Delta-1 and Jagged-1 had the opposite effect on DC differentiation. Delta-1 promoted generation of fully differentiated DCs, whereas Jagged-1 stimulated accumulation of DC precursors but prevented their transition to terminally differentiated DCs. BMS expressed a substantially higher level of Jagged-1 than Delta-1. Just the opposite expression pattern was observed in spleen stroma (SS). The BMS effect on DC differentiation was similar to that of Jagged-1, whereas the effect of SS was similar to the effect of Delta-1. Down-regulation of Jagged-1 in BMS substantially increased DC differentiation. Experiments in vivo with adoptive transfer of DC precursors further supported the different roles of BMS and SS in DC development. Jagged-1 and Delta-1 equally activated CBF-1/RBPJkappa transcription factor, which is a major Notch target. However, they produced a different pattern of activation of Notch target gene Hes1. Overexpression of Hes1 resulted in increased DC differentiation from HPCs. Thus, this study not only revealed the different role of Notch ligands in DC differentiation but also may provide a new insight into regulation of DC differentiation by BMS.