Aberrations of Notch signaling have been implicated in a variety of human cancers. Oncogenic mutations in NOTCH1 are common in human T-cell leukemia and lymphomas. However, loss-of-function somatic mutations in NOTCH1 arising in solid tumors imply a tumor suppressor function, which highlights the need to understand Notch signaling more completely. Here, we describe the small GTPase RhoE/Rnd3 as a downstream mediator of Notch signaling in squamous cell carcinomas (SCC) that arise in skin epithelia. RhoE is a transcriptional target of activated Notch1, which is attenuated broadly in SCC cells. RhoE depletion suppresses Notch1-mediated signaling in vitro, rendering primary keratinocytes resistant to Notch1-mediated differentiation and thereby favoring a proliferative cell fate. Mechanistic investigations indicated that RhoE controls a key step in Notch1 signaling by mediating nuclear translocation of the activated portion of Notch1 (N1IC) through interaction with importins. Our results define RhoE as a Notch1 target that is essential for recruitment of N1IC to the promoters of Notch1 target genes, establishing a regulatory feedback loop in Notch1 signaling. This molecular circuitry may inform distinct cell fate decisions to Notch1 in epithelial tissues, where carcinomas such as SCC arise. Cancer Res; 74(7); 2082-93. ©2014 AACR.