IL-7 signaling is required for thymocyte development and its loss has a severe deleterious effect on thymus function. Thymocyte-stromal cell interactions and other mechanisms tightly regulate IL-7 expression. We show that disruption of that regulation by over-expression of IL-7 inhibits T-cell development and promotes extensive B-cell lymphopoiesis in the thymus. Our data reveal that high levels of IL-7 negate Notch-1 function in thymocytes found in IL-7 transgenic mice and in co-culture with OP9-DL1 cells. While high levels of IL-7R are present on thymocytes, increased suppressor of cytokine signaling-1 expression blunts IL-7 downstream signaling, resulting in hypo-phosphorylation of proteins in the PI3K-Akt pathway. Consequently, GSK3β remains active and inhibits Notch-1 signaling as observed by decreased Hes-1 and Deltex expression in thymic progenitors. This is the first demonstration that high levels of IL-7 antagonize Notch-1 signaling and suggest that IL-7 may affect T- versus B-lineage choice in the thymus.