Injured epithelial organs must rapidly replace damaged cells to restore barrier integrity and physiological function. In response, injury-born stem cell progeny differentiate faster compared to healthy-born counterparts, yet the mechanisms that expedite differentiation are unclear. Using the adult intestine, we find that injury accelerates differentiation by modulating the lateral inhibition circuit that transduces a fate-determining Notch signal. During routine intestinal turnover, balanced terminal (Notch-active) and stem (Notch-inactive) fates arise through lateral inhibition in which Notch-Delta signaling between two stem cell daughters resolves over time to activate Notch and extinguish Delta in one cell. When we feed flies a gut-damaging toxin, injury-induced cytokines cause Notch-activated cells to escape normal Delta suppression by inactivating the Notch co-repressor Groucho. Mathematical modeling predicts that this augmented Delta prompts faster Notch signaling; indeed, live imaging reveals that injury-born cells undergo markedly faster Notch signal transduction. Thus, Notch-Delta lateral inhibition-a switch that regulates fates during steady-state turnover-also serves as a throttle that tunes differentiation speed according to tissue need.