The receptor tyrosine kinase/PI3K/AKT/mammalian target of rapamycin (RTK/PI3K/AKT/mTOR) pathway is frequently altered in cancer, but the underlying mechanism leading to tumorigenesis by activated mTOR remains less clear. Here we show that mTOR is a positive regulator of Notch signaling in mouse and human cells, acting through induction of the STAT3/p63/Jagged signaling cascade. Furthermore, in response to differential cues from mTOR, we found that Notch served as a molecular switch to shift the balance between cell proliferation and differentiation. We determined that hyperactive mTOR signaling impaired cell differentiation of murine embryonic fibroblasts via potentiation of Notch signaling. Elevated mTOR signaling strongly correlated with enhanced Notch signaling in poorly differentiated but not in well-differentiated human breast cancers. Both human lung lymphangioleiomyomatosis (LAM) and mouse kidney tumors with hyperactive mTOR due to tumor suppressor TSC1 or TSC2 deficiency exhibited enhanced STAT3/p63/Notch signaling. Furthermore, tumorigenic potential of cells with uncontrolled mTOR signaling was suppressed by Notch inhibition. Our data therefore suggest that perturbation of cell differentiation by augmented Notch signaling might be responsible for the underdifferentiated phenotype displayed by certain tumors with an aberrantly activated RTK/PI3K/AKT/mTOR pathway. Additionally, the STAT3/p63/Notch axis may be a useful target for the treatment of cancers exhibiting hyperactive mTOR signaling.