The remarkable adaptive and regenerative capacity of skeletal muscle is regulated by several transcription factors and pathways. Here we show that the transcription factor Prox1 is an important regulator of myoblast differentiation and of slow muscle fibre type. In both rodent and human skeletal muscles Prox1 is specifically expressed in slow muscle fibres and in muscle stem cells called satellite cells. Prox1 activates the NFAT signalling pathway and is necessary and sufficient for the maintenance of the gene program of slow muscle fibre type. Using lineage-tracing we show that Prox1-positive satellite cells differentiate into muscle fibres. Furthermore, we provide evidence that Prox1 is a critical transcription factor for the differentiation of myoblasts via bi-directional crosstalk with Notch1. These results identify Prox1 as an essential transcription factor that regulates skeletal muscle phenotype and myoblast differentiation by interacting with the NFAT and Notch pathways.