microRNAs regulate developmental cell-fate decisions, tissue homeostasis, and oncogenesis in distinct ways relative to proteins. Here, we show that the tumor suppressor microRNA miR-34a is a cell-fate determinant in early-stage dividing colon cancer stem cells (CCSCs). In pair-cell assays, miR-34a distributes at high levels in differentiating progeny, whereas low levels of miR-34a demarcate self-renewing CCSCs. Moreover, miR-34a loss of function and gain of function alter the balance between self-renewal versus differentiation both in vitro and in vivo. Mechanistically, miR-34a sequesters Notch1 mRNA to generate a sharp threshold response where a bimodal Notch signal specifies the choice between self-renewal and differentiation. In contrast, the canonical cell-fate determinant Numb regulates Notch levels in a continuously graded manner. Altogether, our findings highlight a unique microRNA-regulated mechanism that converts noisy input into a toggle switch for robust cell-fate decisions in CCSCs.