Drosophila larval hemocytes originate from a hematopoietic organ called lymph glands, which are composed of paired lobes located along the dorsal vessel. Two mature blood cell populations are found in the circulating hemolymph: the macrophage-like plasmatocytes, and the crystal cells that contain enzymes of the immune-related melanization process. A third class of cells, called lamellocytes, are normally absent in larvae but differentiate after infection by parasites too large to be phagocytosed. Here we present evidence that the Notch signaling pathway plays an instructive role in the differentiation of crystal cells. Loss-of-function mutations in Notch result in severely decreased crystal cell numbers, whereas overexpression of Notch provokes the differentiation of high numbers of these cells. We demonstrate that, in this process, Serrate, not Delta, is the Notch ligand. In addition, Notch function is necessary for lamellocyte proliferation upon parasitization, although Notch overexpression does not result in lamellocyte production. Finally, Notch does not appear to play a role in the differentiation of the plasmatocyte lineage. This study underlines the existence of parallels in the genetic control of hematopoiesis in Drosophila and in mammals.