Cleft palate is a common congenital disorder that affects up to 1 in 2500 live births and results in considerable morbidity to affected individuals and their families. The aetiology of cleft palate is complex with both genetic and environmental factors implicated. Mutations in the transcription factor p63 are one of the major individual causes of cleft palate; however, the gene regulatory networks in which p63 functions remain only partially characterized. Our findings demonstrate that p63 functions as an essential regulatory molecule in the spatio-temporal control of palatal epithelial cell fate to ensure appropriate fusion of the palatal shelves. Initially, p63 induces periderm formation and controls its subsequent maintenance to prevent premature adhesion between adhesion-competent, intra-oral epithelia. Subsequently, TGFβ3-induced down-regulation of p63 in the medial edge epithelia of the palatal shelves is a pre-requisite for palatal fusion by facilitating periderm migration from, and reducing the proliferative potential of, the midline epithelial seam thereby preventing cleft palate.