Multipotent Pax3-positive (Pax3(+)) cells in the somites give rise to skeletal muscle and to cells of the vasculature. We had previously proposed that this cell-fate choice depends on the equilibrium between Pax3 and Foxc2 expression. In this study, we report that the Notch pathway promotes vascular versus skeletal muscle cell fates. Overactivating the Notch pathway specifically in Pax3(+) progenitors, via a conditional Pax3(NICD) allele, results in an increase of the number of smooth muscle and endothelial cells contributing to the aorta. At limb level, Pax3(+) cells in the somite give rise to skeletal muscles and to a subpopulation of endothelial cells in blood vessels of the limb. We now demonstrate that in addition to the inhibitory role of Notch signaling on skeletal muscle cell differentiation, the Notch pathway affects the Pax3:Foxc2 balance and promotes the endothelial versus myogenic cell fate, before migration to the limb, in multipotent Pax3(+) cells in the somite of the mouse embryo.