The bone morphogenetic protein (BMP) and Notch signaling pathways are crucial for cellular differentiation. In many cases, the two pathways act similarly; for example, to inhibit myogenic differentiation. It is not known whether this inhibition is caused by distinct mechanisms or by an interplay between Notch and BMP signaling. Here we demonstrate that functional Notch signaling is required for BMP4-mediated block of differentiation of muscle stem cells, i.e. satellite cells and the myogenic cell line C2C12. Addition of BMP4 during induction of differentiation dramatically reduced the number of differentiated satellite and C2C12 cells. Differentiation was substantially restored in BMP4-treated cultures by blocking Notch signaling using either the gamma-secretase inhibitor L-685,458 or by introduction of a dominant-negative version of the Notch signal mediator CSL. BMP4 addition to C2C12 cells increased transcription of two immediate Notch responsive genes, Hes1 and Hey1, an effect that was abrogated by L-685,458. A 3 kb Hey1-promoter reporter construct was synergistically activated by the Notch 1 intracellular domain (Notch 1 ICD) and BMP4. The BMP4 mediator SMAD1 mimicked BMP activation of the Hey1 promoter. A synthetic Notch-responsive promoter containing no SMAD1 binding sites responded to SMAD1, indicating that DNA-binding activity of SMAD1 is not required for activation. Accordingly, Notch 1 ICD and SMAD1 interacted in binding experiments in vitro. Thus, the data presented here provide evidence for a direct interaction between the Notch and BMP signaling pathways, and indicate that Notch has a crucial role in the execution of certain aspects of BMP-mediated differentiation control.