Notch is a transmembrane receptor functioning in the determination of cell fate. Abnormal Notch signaling promotes tumor development, showing either oncogenic or tumor suppressive activity. The uncertainty about the exact role of Notch signaling, partially, stems from inconsistencies in descriptions of Notch expression in human cancers. Here, we clarified basal-cell dominant expression of NOTCH1 in squamous epithelium. NOTCH1 was downregulated in squamous neoplasms of oral mucosa, esophagus and uterine cervix, compared with the normal basal cells, although the expression tended to be retained in cervical lesions. NOTCH1 downregulation was observed even in precancers, and there was little difference between cancers and high-grade precancerous lesions, suggesting its minor contribution to cancer-specific events such as invasion. In culture experiments, reduction of NOTCH1 expression resulted in downregulation of keratin 13 and keratin 15, and upregulation of keratin 17, and NOTCH1 knockdown cells formed a dysplastic stratified epithelium mimicking a precancerous lesion. The NOTCH1 downregulation and the concomitant alterations of those keratin expressions were confirmed in the squamous neoplasms both by immunohistochemical and cDNA microarray analyses. Our data indicate that reduction of NOTCH1 expression directs the basal cells to cease terminal differentiation and to form an immature epithelium, thereby playing a major role in the histopathogenesis of epithelial dysplasia. Furthermore, downregulation of NOTCH1 expression seems to be an inherent mechanism for switching the epithelium from a normal and mature state to an activated and immature state, suggesting its essential role in maintaining the epithelial integrity.