Horizontal basal cells (HBCs) residing within severely damaged olfactory epithelium (OE) mediate OE regeneration by differentiating into odorant-detecting olfactory sensory neurons (OSNs) and other tissue supporting non-neuronal cell types. Depending on both tissue type and integrity, the Notch signaling pathway can either positively or negatively regulate resident stem cell activity. Although Notch1 specifies HBC dormancy in the uninjured OE, little is known about how HBCs are influenced by the Notch pathway following OE injury. Here, we show that HBCs depend on a functional inversion of the Notch pathway to appropriately mediate OE regeneration. At 24 h post-injury, HBCs enhance Notch1-mediated signaling. Moreover, at 3 days post-injury when the regenerating OE is composed of multiple cell layers, HBCs enrich both Notch1 and the Notch ligand, Dll1. Notably, HBC-specific Notch1 knockout increases HBC quiescence and impairs HBC differentiation into neuronal progenitors and OSNs. Interestingly, complete HBC knockout of Dll1 only decreases differentiation of HBC-derived OSNs. These data underscore the context-dependent nature of Notch signaling. Furthermore, they reveal that HBCs regulate their own neurogenic potential after OE injury.