In sprouting angiogenesis, specialized endothelial tip cells lead the outgrowth of blood-vessel sprouts towards gradients of vascular endothelial growth factor (VEGF)-A. VEGF-A is also essential for the induction of endothelial tip cells, but it is not known how single tip cells are selected to lead each vessel sprout, and how tip-cell numbers are determined. Here we present evidence that delta-like 4 (Dll4)-Notch1 signalling regulates the formation of appropriate numbers of tip cells to control vessel sprouting and branching in the mouse retina. We show that inhibition of Notch signalling using γ-secretase inhibitors, genetic inactivation of one allele of the endothelial Notch ligand Dll4, or endothelial-specific genetic deletion of Notch1, all promote increased numbers of tip cells. Conversely, activation of Notch by a soluble jagged1 peptide leads to fewer tip cells and vessel branches. Dll4 and reporters of Notch signalling are distributed in a mosaic pattern among endothelial cells of actively sprouting retinal vessels. At this location, Notch1-deleted endothelial cells preferentially assume tip-cell characteristics. Together, our results suggest that Dll4-Notch1 signalling between the endothelial cells within the angiogenic sprout serves to restrict tip-cell formation in response to VEGF, thereby establishing the adequate ratio between tip and stalk cells required for correct sprouting and branching patterns. This model offers an explanation for the dose-dependency and haploinsufficiency of the Dll4 gene, and indicates that modulators of Dll4 or Notch signalling, such as γ-secretase inhibitors developed for Alzheimer's disease, might find usage as pharmacological regulators of angiogenesis.