Cleft palate, the most frequent congenital craniofacial birth defect, is a multifactorial condition induced by the interaction of genetic and environmental factors. In addition to complete cleft palate, a large number of human cases involve soft palate cleft and submucosal cleft palate. However, the etiology of these forms of cleft palate has not been well understood. T-box transcriptional factor (Tbx) family of transcriptional factors has distinct roles in a wide range of embryonic differentiation or response pathways. Here, we show that genetic disruption of Tbx1, a major candidate gene for the human congenital disorder 22q11.2 deletion syndrome (Velo-cardio-facial/DiGeorge syndrome), led to abnormal epithelial adhesion between the palate and mandible in mouse, resulting in various forms of cleft palate similar to human conditions. We found that hyperproliferative epithelium failed to undergo complete differentiation in Tbx1-null mice (Tbx1(-/-)). Inactivation of Tbx1 specifically in the keratinocyte lineage (Tbx1(KCKO)) resulted in an incomplete cleft palate confined to the anterior region of the palate. Interestingly, Tbx1 overexpression resulted in decreased cell growth and promoted cell-cycle arrest in MCF7 epithelial cells. These findings suggest that Tbx1 regulates the balance between proliferation and differentiation of keratinocytes and is essential for palatal fusion and oral mucosal differentiation. The impaired adhesion separation of the oral epithelium together with compromised palatal mesenchymal growth is an underlying cause for various forms of cleft palate phenotypes in Tbx1(-/-) mice. Our present study reveals new pathogenesis of incomplete and submucous cleft palate during mammalian palatogenesis.