Change Notification Layout

First create an xml for your notification.

custom_notification.xml:

<RelativeLayout xmlns:android="http://schemas.android.com/apk/res/android"
    android:id="@+id/layout"
    android:layout_width="fill_parent"
    android:layout_height="fill_parent"
    android:padding="10dp" >
    <ImageView android:id="@+id/image"
        android:layout_width="wrap_content"
        android:layout_height="fill_parent"
        android:layout_alignParentLeft="true"
        android:layout_marginRight="10dp" />
    <TextView android:id="@+id/title"
        android:layout_width="wrap_content"
        android:layout_height="wrap_content"
        android:layout_toRightOf="@id/image"
        style="Custom Notification Title" />
    <TextView android:id="@+id/text"
        android:layout_width="wrap_content"
        android:layout_height="wrap_content"
        android:layout_toRightOf="@id/image"
        android:layout_below="@id/title"
        style="Custom Notification Text" />
</RelativeLayout>

Now the java code:

public class MainActivity extends Activity {

    @SuppressWarnings("deprecation")
    @Override
    public void onCreate(Bundle savedInstanceState) {
        super.onCreate(savedInstanceState);
        setContentView(R.layout.activity_main);

        int icon = R.drawable.ic_launcher;
        long when = System.currentTimeMillis();
        Notification notification = new Notification(icon, "Custom Notification", when);

        NotificationManager mNotificationManager = (NotificationManager)getSystemService(NOTIFICATION_SERVICE);

        RemoteViews contentView = new RemoteViews(getPackageName(), R.layout.custom_notification);
        contentView.setImageViewResource(R.id.image, R.drawable.ic_launcher);
        contentView.setTextViewText(R.id.title, "Custom notification");
        contentView.setTextViewText(R.id.text, "This is a custom layout");
        notification.contentView = contentView;

        Intent notificationIntent = new Intent(this, MainActivity.class);
        PendingIntent contentIntent = PendingIntent.getActivity(this, 0, notificationIntent, 0);
        notification.contentIntent = contentIntent;

        notification.flags |= Notification.FLAG_NO_CLEAR; //Do not clear the notification
        notification.defaults |= Notification.DEFAULT_LIGHTS; // LED
        notification.defaults |= Notification.DEFAULT_VIBRATE; //Vibration
        notification.defaults |= Notification.DEFAULT_SOUND; // Sound

        mNotificationManager.notify(1, notification);
    }

    @Override
    public boolean onCreateOptionsMenu(Menu menu) {
        getMenuInflater().inflate(R.menu.activity_main, menu);
        return true;
    }
}

Hope this thing works for you.

Edit: You can also visit if you come across problem like this.

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Edit April 26 2016 You can use NotificationCompat.Builder for creating Notification instance as below:

NotificationCompat.Builder notificationBuilder = new NotificationCompat.Builder(this)
            .setSmallIcon(icon)
            .setContent(contentView)
            .setContentTitle("Custom Notification")
            .setWhen(when);
...
mNotificationManager.notify(1, notificationBuilder.build());