Epidermal homeostasis depends on a balance between self-renewal of stem cells and terminal differentiation of their progeny. Notch signalling is known to play a role in epidermal stem cell patterning and differentiation. However, the molecular mechanisms are incompletely understood. Here we demonstrate dynamic patterns of Notch ligand and receptor expression in cultured human epidermis. Notch2 and 3 act together to promote differentiation, while Notch1 decreases stem cell proliferation. The Notch ligand Jagged1 triggers differentiation when presented on an adhesive substrate or on polystyrene beads and over-rides the differentiation inhibitory effect of cell spreading. In contrast, Delta-like 1 (Dll1) overexpression abrogates the pro-differentiation effect of Jagged1 in a cell autonomous fashion. We conclude that Dll1 expression by stem cells not only stimulates differentiation of neighbouring cells in trans, but also inhibits differentiation cell autonomously. These results highlight the distinct roles of different Notch receptors and ligands in controlling epidermal homeostasis.