The p53 tumour suppressor is a transcription factor that regulates the progression of the cell through its cycle and cell death (apoptosis) in response to environmental stimuli such as DNA damage and hypoxia. Even though p53 modulates these critical cellular processes, mice that lack p53 are developmentally normal, suggesting that p53-related proteins might compensate for the functions of p53 during embryogenesis. Two p53 homologues, p63 and p73, are known and here we describe the function of p63 in vivo. Mice lacking p63 are born alive but have striking developmental defects. Their limbs are absent or truncated, defects that are caused by a failure of the apical ectodermal ridge to differentiate. The skin of p63-deficient mice does not progress past an early developmental stage: it lacks stratification and does not express differentiation markers. Structures dependent upon epidermal-mesenchymal interactions during embryonic development, such as hair follicles, teeth and mammary glands, are absent in p63-deficient mice. Thus, in contrast to p53, p63 is essential for several aspects of ectodermal differentiation during embryogenesis.