During embryogenesis, the transcription factor Tp63 is expressed in the basal cells of multiple epithelial tissues. In humans, mutations in TP63 have been identified in five distinct human developmental disorders that are characterized by limb abnormalities, ectodermal dysplasia, and facial anomalies. To dissect the molecular pathogenesis of the bilateral cleft lip and cleft palate that results from mutation of Tp63, we analysed Tp63 mutant mice. At E10.5, Tp63-deficient mice exhibited abnormal morphogenesis of the medial nasal, lateral nasal and maxillary processes. Analysis of key signaling molecules revealed that these defects result from increased Bmp4 signaling in the epithelia of the facial processes. Acting antagonistically on Fgf8 and Shh, this aberrant signaling led to a reduction in mesenchymal cell proliferation and increased cell death in specific regions of the facial processes. In addition, a proliferative defect in the mesenchyme of the maxillary processes at E11.5 resulted in absence of the anterior region of the palatal shelves and, subsequently, cleft palate. Our results are consistent with a role for Tp63 in the regulation of Bmp signaling controlling the growth, modelling and fusion events underlying facial development and shed new light on the complex abnormality of facial clefting.