Craniofacial malformations are among the most frequent congenital birth defects in humans; cleft palate, that is inadequate fusion of the palatal shelves, occurs with an annual incidence of 1 in 700 to 1 in 1,000 live births among individuals of European descent. The secondary palate arises as bilateral outgrowths from the maxillary processes, and its formation depends on the coordinated development of craniofacial structures including the Meckel's cartilage and the mandible. Cleft lip and palate syndromes in humans are associated with polymorphisms in the gene (TGFA) encoding transforming growth factor-alpha (TGF-alpha), an epidermal growth factor receptor (EGFR) ligand made by most epithelia. Here we have characterized craniofacial development in Egfr-deficient (Egfr-/-) mice. Newborn Egfr-/- mice have facial mediolateral defects including narrow, elongated snouts, underdeveloped lower jaw and a high incidence of cleft palate. Palatal shelf explants from Egfr-/- mice fused, but frequently had residual epithelium in the midline. In addition, morphogenesis of Meckel's cartilage was deficient in cultured mandibular processes from Egfr-/- embryos. The secretion of matrix metalloproteinases (MMPs) was diminished in Egfr-/- explants, consistent with the ability of EGF to increase MMP secretion and with the decreased MMP expression caused by inhibition of Egfr signalling in wild-type explants. Accordingly, inactivation of MMPs in wild-type explants phenocopied the defective morphology of Meckel's cartilage seen in Egfr-/- explants. Our results indicate that EGFR signalling is necessary for normal craniofacial development and that its role is mediated in part by its downstream targets, the MMPs, and may explain the genetic correlation of human cleft palate with polymorphisms in TGFA.