Areca nut has been evaluated as a group I carcinogen to humans. However, the exact compounds of areca nut causing oral cancer remain unproven. Previous findings from our lab revealed that arecoline N‐oxide (ANO), a metabolite of arecoline, exhibits an oral fibrotic effect in immune‐deficient NOD/SCID mice. The aim of this study is to investigate the oral potentially malignant disorders (OPMD) inductive activity between areca‐alkaloid arecoline and its metabolite ANO in C57BL/6 mice. Our findings show that ANO showed higher activity in inducing hyperplasia with leukoplakia and collagen deposition in C57BL/6 mice compared with the arecoline treated groups. Importantly, immunohistochemical studies showed significant upregulation of NOTCH1, HES1, FAT1, PCNA, and Ki67 expressions in the pathological hyperplastic part. In addition, in vitro studies showed that upregulation of NOTCH1 and FAT1 expressions in ANO treated HGF‐1 and DOK cell models. We found that NOTCH1 regulates TP53 expression from NOTCH1 knockdown oral cancer cells. The DNA damage was significantly increased after arecoline and ANO treatment. Further, we found that arecoline‐induced H2AX expression was regulated by FMO3. Altogether, our findings show that ANO exhibited higher toxicity in OPMD activity and play a significant role in the induction of areca nut mediated oral tumorigenesis. ANO accelerates somatic mutation of NOTCH1 and FAT1 expression in the OSCC development.