A growing body of literature indicates that the Notch pathway can influence the activation and differentiation of peripheral murine T cells, though comparatively little is known about the effects of Notch signaling in human T cells. In the present report we demonstrate that Jagged-1-induced Notch signaling (using immobilized Jagged-1 fusion protein) during stimulation of purified human CD4+ and CD8+ T cells potently inhibits T cell proliferation and effector function, including both Th1- and Th2-associated cytokines. Inhibition of T cell activation is not due to apoptosis or disruption of proximal TCR signaling, but is associated with up-regulation of GRAIL (gene related to anergy in lymphocytes) in CD4+ T cells, with modest effects on other E3 ubiquitin ligases such as c-Cbl and Itch. When evaluated for its effects on CD4+ T cell differentiation, Jagged-1-mediated signaling inhibits T cell cytokine secretion with no significant effect on proliferative responses. Collectively, these data demonstrate that Notch signaling in human T cells induced by Jagged-1 promotes a novel form of T cell hyporesponsiveness that differs from anergy, whereby primary T cell proliferation and cytokine secretion are potently inhibited, and effector function but not proliferative capacity are ameliorated upon secondary stimulation.