Adult olfactory neurogenesis plays critical roles in maintaining olfactory functions. Newly-generated neurons in the subventricular zone migrate to the olfactory bulb (OB) and determine olfactory discrimination, but the mechanisms underlying the regulation of olfactory neurogenesis remain unclear. Our previous study indicated the potential of APPL2 (adaptor protein, phosphotyrosine interacting with PH domain and leucine zipper 2) as a modulating factor for neurogenesis in the adult olfactory system. In the present study, we report how APPL2 affects neurogenesis in the OB and thereby mediates olfactory discrimination by using both in vitro neural stem cells (NSCs) and an in vivo animal model-APPL2 transgenic (Tg) mice. In the in vitro study, we found that APPL2 overexpression resulted in NSCs switching from neuronal differentiation to gliogenesis while APPL2 knockdown promoted neurogenesis. In the in vivo study, APPL2 Tg mice had a higher population of glial cells and dampened neuronal production in the olfactory system, including the corpus callosum, OB, and rostral migratory stream. Adult APPL2 Tg mice displayed impaired performance in olfactory discrimination tests compared with wild-type mice. Furthermore, we found that an interaction of APPL2 with Notch1 contributed to the roles of APPL2 in modulating the neurogenic lineage-switching and olfactory behaviors. In conclusion, APPL2 controls olfactory discrimination by switching the fate choice of NSCs via interaction with Notch1 signaling.