The Notch signaling pathway is a highly conserved mode of intercellular communication used extensively in metazoan development to direct cell fate decisions. Originally identified in Drosophila, which contains a single receptor, mammals contain four Notch receptors (Notch1-4). Of these, Notch1 shares the greatest homology with Drosophila Notch. Notch1 is essential for embryonic development and formation of the vascular and hematopoietic systems. Critical Notch1 functions in the hematopoietic system include generating the first hematopoietic stem cells (HSC) and instructing multipotent hematopoietic progenitors to become T cells. Activating Notch1 mutations occur in multiple human cancers, including acute T cell lymphoblastic leukemia (T-ALL), chronic lymphocytic leukemia (CLL) and mantle cell lymphoma (MCL). While Notch1 is required to generate the earliest embryonic HSCs, additional physiologic functions for Notch in embryonic HSC biology have not been described as constitutive pan-Notch deletion in early embryogenesis leads to lethality by E10.5. Ex vivo approaches suggest that Notch signaling can expand HSCs raising the question of whether this is a physiologic Notch function. To address this question, we generated mice that express a hypomorphic Notch1 allele. Unlike Notch1-deficient mice, mice lacking the conserved Notch1 transcriptional activation domain (TAD) show attenuated Notch1 function in vivo and survive until late gestation, succumbing to multiple cardiac abnormalities. Notch1 TAD-deficient HSCs emerge from aorta-gonad-mesonephros region and are capable of migrating to the fetal liver, but are present at a decreased frequency and impaired in their ability to provide hematopoietic reconstitution to transplant recipients. This finding was confirmed using an independent system where Notch signaling was conditionally ablated in fetal hematopoietic cells. In vitro analysis of Notch1 TAD-deficient cells shows that the Notch1 TAD is important for the proper assembly of the Notch transcriptional activation complex. Consistent with this, the TAD is also required to promote optimal transcription of known Notch target genes in vitro. Together, these studies reveal an essential role for the Notch1 TAD in fetal development and fetal HSC homeostasis, and identify a novel requirement for Notch1 signaling in HSC function.