Embryonic stem cells represent an attractive source of cardiomyocytes for cell-replacement therapies. However, before embryonic stem cells can be successfully used for the treatment of cardiac diseases, the precise molecular mechanisms that underlie their cardiogenic differentiation must be identified. A network of intrinsic and extrinsic factors regulates embryonic stem cell self-renewal and differentiation into a variety of different cell lineages. Here, we show that Notch signaling takes place in some but not all embryonic stem cells and that the Notch pathway is shut down during the course of differentiation concomitantly with downregulation of Notch receptor and ligand expression. Moreover, gain- and loss-of-function experiments for Notch signaling components show that this pathway is a crucial regulator of cardiomyocyte differentiation within ES cells. Differentiation of ES cells into cardiomyocytes is favored by inactivation of the Notch1 receptor, whereas endogenous Notch signaling promotes differentiation of ES cells into the neuronal lineage. We conclude that Notch signaling influences the cell fate decision between mesodermal and the neuroectodermal cell fates during embryonic stem cell differentiation. These findings should help to optimize the production of specific cell types via modulation of the Notch pathways and, in particular, to improve the production of embryonic stem cell-derived cardiomyocytes.