The Notch pathway is a core cell-cell signaling system in metazoan organisms with key roles in cell-fate determination, stem cell maintenance, immune system activation, and angiogenesis. Signals are initiated by extracellular interactions of the Notch receptor with Delta/Serrate/Lag-2 (DSL) ligands, whose structure is highly conserved throughout evolution. To date, no structure or activity has been associated with the extreme N termini of the ligands, even though numerous mutations in this region of Jagged-1 ligand lead to human disease. Here, we demonstrate that the N terminus of human Jagged-1 is a C2 phospholipid recognition domain that binds phospholipid bilayers in a calcium-dependent fashion. Furthermore, we show that this activity is shared by a member of the other class of Notch ligands, human Delta-like-1, and the evolutionary distant Drosophila Serrate. Targeted mutagenesis of Jagged-1 C2 domain residues implicated in calcium-dependent phospholipid binding leaves Notch interactions intact but can reduce Notch activation. These results reveal an important and previously unsuspected role for phospholipid recognition in control of this key signaling system.