Prostate cancer (PC) is still the second cause of cancer‐related death among men. Although patients with metastatic presentation have an ominous outcome, the vast majority of PCs are diagnosed at an early stage. Nonetheless, even among patients with clinically localized disease the outcome may vary considerably. Other than androgen sensitivity, little is known about which other signaling pathways are deranged in aggressive, localized cancers. The elucidation of such pathways may help to develop innovative therapies aimed at specific molecular targets. We report that in a hormone‐sensitive PC cell line, LNCaP, Notch3 was activated by hypoxia and sustained cell proliferation and colony formation in soft agar. Hypoxia also modulated cellular cholesterol content and the number and size of lipid rafts, causing a coalescence of small rafts into bigger clusters; under this experimental condition, Notch3 migrated from the non‐raft into the raft compartment where it colocalized with the γ‐secretase complex. We also looked at human PC biopsies and found that expression of Notch3 positively correlated with Gleason score and with expression of carbonic anhydrase IX, a marker of hypoxia. In conclusion, hypoxia triggers the activation of Notch3, which, in turn, sustains proliferation of PC cells. Notch3 pathway represents a promising target for adjuvant therapy in patients with PC.