Sensorineural deafness and balance dysfunction are common impairments in humans frequently caused by defects in the sensory epithelium of the inner ear, composed of hair cells and supporting cells. Lineage studies have shown that hair cells and supporting cells arise from a common progenitor, but how these progenitors are generated remains unknown. Although various molecules have been implicated in the development of the sensory progenitors, none has been shown to be required for the specification of these progenitors in the mammalian inner ear. Here, using both loss-of-function and gain-of-function approaches, we show that Jagged1 (JAG1)-mediated Notch signaling is both required and sufficient for the generation of the sensory progenitors. Specifically, we find that loss of JAG1 signaling leads to smaller sensory progenitor regions without initial effects on proliferation or cell death, indicating that JAG1 is involved in initial specification events. To further test whether Notch signaling is involved in specification of the sensory progenitors, we transiently expressed an activated form of the Notch1 receptor (NICD) using a combined Tet-On/Cre induction system in the mouse. NICD expression resulted in ectopic hair cells and supporting cells in the nonsensory regions of the cochlea and vestibule. These data indicate that Notch specifies sensory progenitors in the inner ear, and that induction of Notch may be important for regenerating or replacing hair cells and supporting cells in the mammalian inner ear.