Studies on transforming growth factor β3 (TGF‐β3) deficient mice have shown that TGF‐β3 plays a critical role in palatogenesis. These null mutant mice have clefting of the secondary palate, caused by a defect in the process of fusion of the palatal shelves. A critical step in mammalian palatal fusion is removal of the medial edge epithelial cells from the midline seam and formation of continuous mesenchyme. To determine in more detail the role of TGF‐β3 in palatogenesis, we cultured TGF‐β3 null mutant and wild‐type control palatal shelves in an organ culture system. The fate of the medial edge epithelial cells was studied in vitro using vital cell labeling and immunohistochemical techniques. Despite clear adherence, the null mutant palatal shelves did not fuse in vitro, but instead the medial edge epithelial cells survived at the midline position, and the basement membrane was resistant towards degradation. Supplementation of the culture medium with the mature form of TGF‐β3 was able to fully correct the defective fusion in the null mutant specimens. Our results demonstrate that the reason for the defective palatal fusion in TGF‐β3 (−/−) samples is not impaired adhesion. Our data define a specific role for TGF‐β3 in the events that control transdifferentiation of the medial edge epithelial cells including degradation of the underlying basement membrane. Dev. Dyn. 209:255–260, 1997. © 1997 Wiley‐Liss, Inc.