Epidermal growth factor-like domain 7 (EGFL7) is a secreted factor implicated in cellular responses such as cell migration and blood vessel formation; however the molecular mechanisms underlying the effects of EGFL7 are largely unknown. Here we have identified transmembrane receptors of the Notch family as EGFL7-binding molecules. Secreted EGFL7 binds to a region in Notch involved in ligand-mediated receptor activation, thus acting as an antagonist of Notch signalling. Expression of EGFL7 in neural stem cells (NSCs) in vitro decreased Notch-specific signalling and consequently, reduced proliferation and self-renewal of NSCs. Such altered Notch signalling caused a shift in the differentiation pattern of cultured NSCs towards an excess of neurons and oligodendrocytes. We identified neurons as a source of EGFL7 in the brain, suggesting that brain-derived EGFL7 acts as an endogenous antagonist of Notch signalling that regulates proliferation and differentiation of subventricular zone-derived adult NSCs.