Intramembrane proteolysis by presenilin-dependent gamma-secretase produces the Notch intracellular cytoplasmic domain (NCID) and Alzheimer disease-associated amyloid-beta. Here, we show that upon Notch signaling the intracellular domain of Notch-1 is cleaved into two distinct types of NICD species due to diversity in the site of S3 cleavage. Consistent with the N-end rule, the S3-V cleavage produces stable NICD with Val at the N terminus, whereas the S3-S/S3-L cleavage generates unstable NICD with Ser/Leu at the N terminus. Moreover, intracellular Notch signal transmission with unstable NICDs is much weaker than that with stable NICD. Importantly, the extent of endocytosis in target cells affects the relative production ratio of the two types of NICD, which changes in parallel with Notch signaling. Surprisingly, substantial amounts of unstable NICD species are generated from the Val-->Gly and the Lys-->Arg mutants, which have been reported to decrease S3 cleavage efficiency in cultured cells. Thus, we suggest that the existence of two distinct types of NICD points to a novel aspect of the intracellular signaling and that changes in the precision of S3 cleavage play an important role in the process of conversion from extracellular to intracellular Notch signaling.