DNA variation in Interferon Regulatory Factor 6 (IRF6) causes Van der Woude syndrome (VWS), the most common syndromic form of cleft lip and palate (CLP). However, an etiologic variant in IRF6 has been found in only 70% of VWS families. To test whether DNA variants in regulatory elements cause VWS, we sequenced three conserved elements near IRF6 in 70 VWS families that lack an etiologic mutation within IRF6 exons. A rare mutation (350dupA) was found in a conserved IRF6 enhancer element (MCS9.7) in a Brazilian family. The 350dupA mutation abrogated the binding of p63 and E47 transcription factors to cis-overlapping motifs, and significantly disrupted enhancer activity in human cell cultures. Moreover, using a transgenic assay in mice, the 350dupA mutation disrupted the activation of MCS9.7 enhancer element and led to failure of lacZ expression in all head and neck pharyngeal arches. Interestingly, disruption of the p63 Motif1 and/or E47 binding sites by nucleotide substitution did not fully recapitulate the effect of the 350dupA mutation. Rather, we recognized that the 350dupA created a CAAAGT motif, a binding site for Lef1 protein. We showed that Lef1 binds to the mutated site and that overexpression of Lef1/β-Catenin chimeric protein repressed MCS9.7-350dupA enhancer activity. In conclusion, our data strongly suggest that 350dupA variant is an etiologic mutation in VWS patients and disrupts enhancer activity by a loss- and gain-of-function mechanism, and thus support the rationale for additional screening for regulatory mutations in patients with CLP.