The proepicardium is a transient structure comprising epicardial progenitor cells located at the posterior limit of the embryonic cardiac inflow. A network of signals regulates proepicardial cell fate and defines myocardial and nonmyocardial domains at the venous pole of the heart. During cardiac development, epicardial-derived cells also contribute to coronary vessel morphogenesis. To study Notch function during proepicardium development and coronary vessel formation in the mouse. Using in situ hybridization, RT-PCR, and immunohistochemistry, we find that Notch pathway elements are differentially activated throughout the proepicardial-epicardial-coronary transition. Analysis of RBPJk-targeted embryos indicates that Notch ablation causes ectopic procardiogenic signaling in the proepicardium that in turn promotes myocardial differentiation in adjacent mesodermal progenitors, resulting in a premature muscularization of the sinus venosus horns. Epicardium-specific Notch1 ablation using a Wt1-Cre driver line disrupts coronary artery differentiation, reduces myocardium wall thickness and myocyte proliferation, and reduces Raldh2 expression. Ectopic Notch1 activation disrupts epicardium development and causes thinning of ventricular walls. Epicardial Notch modulates cell differentiation in the proepicardium and adjacent pericardial mesoderm. Notch1 is later required for arterial endothelium commitment and differentiation and for vessel wall maturation during coronary vessel development and myocardium growth.