Cerebral autosomal dominant arteriopathy with subcortical infarcts and leukoencephalopathy (CADASIL) is an inherited vascular dementia characterized by the degeneration of smooth-muscle cells in small cerebral arteries. CADASIL is caused by mutations in NOTCH3, one of the four mammalian homologs to the Drosophila melanogaster NOTCH gene. Disease-associated mutations are distributed throughout the 34 epidermal growth factor-like repeats (EGFRs) that compose the extracellular domain of the Notch3 receptor and result in a loss or a gain of a cysteine residue in one of these EGFRs. In human adults, Notch3 expression is highly restricted to vascular smooth-muscle cells. In patients with CADASIL, there is an abnormal accumulation of Notch3 in the vessel. Molecular pathways linking NOTCH3 mutations to degeneration of vascular smooth-muscle cells are as yet poorly understood. In this study, we investigated the effect of CADASIL mutations on Notch3 activity. We studied five naturally occurring mutations: R90C and C212S, located in the previously identified mutational hotspot EGFR2-5; C428S, shown in this study to be located in the ligand-binding domain EGFR10-11; and C542Y and R1006C, located in EGFR13 and EGFR26, respectively. All five mutant proteins were correctly processed. The C428S and C542Y mutant receptors exhibited a significant reduction in Jagged1-induced transcriptional activity of a RBP/JK responsive luciferase reporter, relative to wild-type Notch3. Impaired signaling activity of these two mutants arose through different mechanisms; the C428S mutant lost its Jagged1-binding ability, whereas C542Y retained it but exhibited an impaired presentation to the cell surface. In contrast, the R90C, C212S, and R1006C mutants retained the ability to bind Jagged1 and were associated with apparently normal levels of signaling activity. We conclude that mutations in Notch3 differently affect Jagged1 binding and Notch3 signaling via the RBP/JK pathway.