Skeletal muscle atrophy in cancer cachexia is mediated by the interaction between muscle stem cells and various tumor factors. Although Notch signaling has been known as a key regulator of both cancer development and muscle stem cell activity, the potential involvement of Notch signaling in cancer cachexia and concomitant muscle atrophy has yet to be elucidated. The murine K7M2 osteosarcoma cell line was used to generate an orthotopic model of sarcoma-associated cachexia, and the role of Notch signaling was evaluated. Skeletal muscle atrophy was observed in the sarcoma-bearing mice, and Notch signaling was highly active in both tumor tissues and the atrophic skeletal muscles. Systemic inhibition of Notch signaling reduced muscle atrophy. In vitro coculture of osteosarcoma cells with muscle-derived stem cells (MDSCs) isolated from normal mice resulted in decreased myogenic potential of MDSCs, while the application of Notch inhibitor was able to rescue this repressed myogenic potential. We further observed that Notch-activating factors reside in the exosomes of osteosarcoma cells, which activate Notch signaling in MDSCs and subsequently repress myogenesis. Our results revealed that signaling between tumor and muscle via the Notch pathway may play an important role in mediating the skeletal muscle atrophy seen in cancer cachexia.