Infantile hemangioma (IH) is a vascular tumor that begins with rapid vascular proliferation shortly after birth, followed by vascular involution in early childhood. We have found that NOTCH3, a critical regulator of mural cell differentiation and maturation, is expressed in hemangioma stem cells (HemSCs), suggesting that NOTCH3 may function in HemSC-to-mural cell differentiation and pathological vessel stabilization. Here, we demonstrate that NOTCH3 is expressed in NG2+PDGFRbeta+ perivascular HemSCs and CD31+GLUT1+ hemangioma endothelial cells (HemECs) in proliferating IHs and becomes mostly restricted to the alphaSMA+NG2loPDGFRbetalo mural cells in involuting IHs. NOTCH3 knockdown in HemSCs inhibited in vitro mural cell differentiation and perturbed alphaSMA expression. In a mouse model of IH, NOTCH3 knockdown or systemic expression of the NOTCH3 inhibitor, NOTCH3 Decoy, significantly decreased IH blood flow, vessel caliber, and alphaSMA+ perivascular cell coverage. Thus, NOTCH3 is necessary for HemSC-to-mural cell differentiation, and adequate perivascular cell coverage of IH vessels is required for IH vessel stability.