The self-renewing epithelium of the small intestine is ordered into stem/progenitor crypt compartments and differentiated villus compartments. Recent evidence indicates that the Wnt cascade is the dominant force in controlling cell fate along the crypt-villus axis. Here we show a rapid, massive conversion of proliferative crypt cells into post-mitotic goblet cells after conditional removal of the common Notch pathway transcription factor CSL/RBP-J. We obtained a similar phenotype by blocking the Notch cascade with a gamma-secretase inhibitor. The inhibitor also induced goblet cell differentiation in adenomas in mice carrying a mutation of the Apc tumour suppressor gene. Thus, maintenance of undifferentiated, proliferative cells in crypts and adenomas requires the concerted activation of the Notch and Wnt cascades. Our data indicate that gamma-secretase inhibitors, developed for Alzheimer's disease, might be of therapeutic benefit in colorectal neoplastic disease.