Notch1 signaling is involved in regulatory T (Treg)-cell differentiation. We previously demonstrated that, when cocultured with CD3+ cells, mesenchymal stem cells (MSCs) induced a T-cell population with a regulatory phenotype. Here, we investigated the molecular mechanism underlying MSC induction of human Treg cells. We show that the Notch1 pathway is activated in CD4+ T cells cocultured with MSCs. Inhibition of Notch1 signaling through GSI-I or the Notch1 neutralizing antibody reduced expression of HES1 (the Notch1 downstream target) and the percentage of MSC-induced CD4+CD25highFOXP3+ cells in vitro. Moreover, we demonstrate that FOXP3 is a downstream target of Notch signaling in human cells. No crosstalk between Notch1 and TGF-β signaling pathways was observed in our experimental system. Together, these findings indicate that activation of the Notch1 pathway is a novel mechanism in the human Treg-cell induction mediated by MSCs.