The main morphological features of the mammalian tooth crown are cusps, but the developmental mechanisms that cause the formation of cusps are unknown. Tooth cusp formation commences at cap-stage with the appearance of the enamel knot, which is a cluster of non-dividing epithelial cells. In this study, enamel knot was first seen in embryonic mice molar teeth at the onset of cap-stage. Later in tooth development, secondary enamel knot structures were observed at the cusp tips and their appearance corresponded to the formation of individual cusp morphology. Comparisons of the pattern of cell proliferation in embryonic mouse molars and the expression of fibroblast growth factor-4 (Fgf-4) gene revealed that expression of Fgf-4 mRNA is strictly localized to the non-dividing cells of the enamel knot. However, when FGF-4 protein was introduced onto isolated dental tissues in vitro, it stimulated the proliferation of both dental epithelial and mesenchymal cells. Based on these results, we suggest that the enamel knot may control tooth morphogenesis by concurrently stimulating cusp growth (via FGF-4 synthesis) and by directing folding of cusp slopes (by not proliferating itself).