Notch signaling in neural progenitor cell is triggered by ligands expressed in adjacent cells. To identify the sources of active Notch ligands in the mouse retina, we negatively regulated Notch ligand activity in various neighbors of retinal progenitor cells (RPCs) by eliminating mindbomb E3 ubiquitin protein ligase 1 (Mib1). Mib1-deficient retinal cells failed to induce Notch activation in intra-lineage RPCs, which prematurely differentiated into neurons; however, Mib1 in post-mitotic retinal ganglion cells was not important. Interestingly, Mib1 in the retinal pigment epithelium (RPE) also contributed to Notch activation in adjacent RPCs by supporting the localization of active Notch ligands at RPE-RPC contacts. Combining this RPE-driven Notch signaling and intra-retinal Notch signaling, we propose a model in which one RPC daughter receives extra Notch signals from the RPE to become an RPC, whereas its sister cell receives only a subthreshold level of intra-retinal Notch signal and differentiates into a neuron.