Notch signaling is a highly conserved pathway between mammals and Drosophila and plays a key role in various biological processes. Drosophila has emerged as a powerful model for studying hematopoiesis and leukemia. In exception to crystal cells, the strength of Notch signaling in Drosophila lymph gland cortical zone (CZ)/intermediate zone (IZ) cells is weak. However, the influence of Notch activation in the lymph gland CZ/IZ cells and circulating hemocytes on hematopoietic homeostasis maintenance is unclear. Here, we showed that Notch activation in lymph gland CZ/IZ cells induced overdifferentiation of progenitors. Moreover, Notch activation promoted lamellocyte generation via NFκB/Toll signaling activation and increased reactive oxygen species (ROS). In addition, we found that Notch activation in lymph gland CZ/IZ cells and circulating hemocytes caused caspase-independent and nonautophagic cell death. However, crystal cell autophagy was activated by upregulation of the expression of the target gene of the Hippo/Yki pathway Diap1. Moreover, we showed that Notch activation could alleviate cytokine storms and improve the survival of Rasv12 leukemia model flies. Our study revealed the various mechanisms of hematopoietic dysregulation induced by Notch activation in healthy flies and the therapeutic effect of Notch activation on leukemia model flies.