Notch genes encode a family of transmembrane proteins that are involved in many cellular processes such as differentiation, proliferation, and apoptosis. Although it is well established that all four Notch genes can act as oncogenes, the mechanism by which Notch proteins transform cells remains unknown. Previously, we have shown that transformation of RKE cells can be conditionally induced by hormone activation of Notch ic-estrogen receptor (ER) chimeras. Using this inducible system, we show that Notch ic activates transcription of the cyclin D1 gene with rapid kinetics. Transcriptional activation of cyclin D1 is independent from serum-derived growth factors and de novo synthesis of secondary transcriptional activators. Moreover, hormone activation of Notch ic-ER proteins induces CDK2 activity in the absence of serum. Upregulation of cyclin D1 and activation of CDK2 by Notch ic result in the promotion of S-phase entry. These data demonstrate the first evidence that Notch ic proteins can directly regulate factors involved in cell cycle control and affect cellular proliferation. Furthermore, nontransforming Notch ic proteins do not induce cyclin D1 expression, indicating that the mechanism of transformation involves cell cycle deregulation through constitutive expression of cyclin D1. Finally, we have identified a CSL [stands for CBF1, Su (H), and Lag-1] binding site within the human and rat cyclin D1 promoters, suggesting that Notch ic proteins activate cyclin D1 transcription through a CSL-dependent pathway.