Background: Polycystic kidney disease (PKD) is a genetic disorder affecting millions of people worldwide that is characterized by fluid-filled cysts and leads to end-stage renal disease (ESRD). The hallmarks of PKD are proliferation and dedifferentiation of tubular epithelial cells, cellular processes known to be regulated by Notch signaling. Methods: We found increased Notch3 expression in human PKD and renal cell carcinoma biopsies. To obtain insight into the underlying mechanisms and the functional consequences of this abnormal expression, we developed a transgenic mouse model with conditional overexpression of the intracellular Notch3 (ICN3) domain specifically in renal tubules. We evaluated the alterations in renal function (creatininemia, BUN) and structure (cysts, fibrosis, inflammation) and measured the expression of several genes involved in Notch signaling and the mechanisms of inflammation, proliferation, dedifferentiation, fibrosis, injury, apoptosis and regeneration. Results: After one month of ICN3 overexpression, kidneys were larger with tubules grossly enlarged in diameter, with cell hypertrophy and hyperplasia, exclusively in the outer stripe of the outer medulla. After three months, mice developed numerous cysts in proximal and distal tubules. The cysts had variable sizes and were lined with a single- or multilayered, flattened, cuboid or columnar epithelium. This resulted in epithelial hyperplasia, which was observed as protrusions into the cystic lumen in some of the renal cysts. The pre-cystic and cystic epithelium showed increased expression of cytoskeletal filaments and markers of epithelial injury and dedifferentiation. Additionally, the epithelium showed increased proliferation with an aberrant orientation of the mitotic spindle. These phenotypic tubular alterations led to progressive interstitial inflammation and fibrosis. Conclusions: In summary, Notch3 signaling promoted tubular cell proliferation, the alignment of cell division, dedifferentiation and hyperplasia, leading to cystic kidney diseases and pre-neoplastic lesions.