Although previous studies demonstrate that appropriate Notch signaling is required during angiogenesis and in vascular homeostasis, the mechanisms by which Notch regulates vascular function remain to be elucidated. Here, we show that activation of the Notch pathway by the ligand Jagged1 reduces the proliferation of endothelial cells. Notch activation inhibits proliferation of endothelial cells in a cell-autonomous manner by inhibiting phosphorylation of the retinoblastoma protein (Rb). During cell cycle entry, p21^Cip1 is upregulated in endothelial cells. Activated Notch inhibits mitogen-induced upregulation of p21^Cip1 and delays cyclin D-cdk4-mediated Rb phosphorylation. Notch-dependent repression of p21^Cip1 prevents nuclear localization of cyclin D and cdk4. The necessity of p21^Cip1 for nuclear translocation of cyclin D-cdk4 and S-phase entry in endothelial cells was demonstrated by targeted downregulation of p21^Cip1 by using RNA interference. We further demonstrate that when endothelial cells reach confluence, Notch is activated and p21^Cip1 is downregulated. Inhibition of the Notch pathway at confluence prevents p21^Cip1 downregulation and induces Rb phosphorylation. We suggest that Notch activation contributes to contact inhibition of endothelial cells, in part through repression of p21^Cip1 expression.