Notch-1 signaling is essential for lymphoid progenitors to undergo T cell commitment, but the mechanism has not been defined. Here we show that thymocytes ectopically expressing Lunatic Fringe, a modifier of Notch-1 signaling, induce lymphoid progenitors to develop into B cells in the thymus. This cell fate switch resulted from Lunatic Fringe-mediated inhibition of Notch-1 function, as revealed by experiments utilizing lymphoid progenitors in which Notch-1 activity was genetically manipulated. These data identify Lunatic Fringe as a potent regulator of Notch-1 during the T/B lineage decision and show that an important function of Notch-1 in T cell commitment is to suppress B cell development in the thymus.