Mammalian epidermis consists of a basal layer of proliferative progenitors that gives rise to multiple differentiating layers to provide a waterproof envelope covering the skin surface. To accomplish this, progenitor cells must detach from the basal layer, move upward, and execute a terminal differentiation program consisting of three distinct stages: spinous, granular layer, and stratum corneum. Notch signaling has been implicated in late stages of differentiation, but the commitment switch remains unknown. Here we show with loss and gain-of-function studies that active Notch intracellular domain (NICD) and its obligate canonical signaling partner RBP-J act at the basal/suprabasal juncture to induce spinous and down-regulate basal fate. Spinous layers are absent in RBP-J conditional null epidermis and expanded when Notch1 signaling is elevated transgenically in epidermis. We show that RBP-J is essential for mediating both spinous gene activation and basal gene repression. In contrast, the NICD/RBP-J target gene Hes1 is expressed in spinous layers and mediates spinous gene induction but not basal gene repression. These data uncover an early role for RBP-J and Notch in commitment of epidermal cells to terminally differentiate and reveal that spinous gene induction is mediated by a Hes1-dependent mechanism, while basal gene repression occurs independently of Hes1.