Studies on transforming growth factor beta3 (TGF-beta3) deficient mice have shown that TGF-beta3 plays a critical role in palatogenesis. These null mutant mice have clefting of the secondary palate, caused by a defect in the process of fusion of the palatal shelves. A critical step in mammalian palatal fusion is removal of the medial edge epithelial cells from the midline seam and formation of continuous mesenchyme. To determine in more detail the role of TGF-beta3 in palatogenesis, we cultured TGF-beta3 null mutant and wild-type control palatal shelves in an organ culture system. The fate of the medial edge epithelial cells was studied in vitro using vital cell labeling and immunohistochemical techniques. Despite clear adherence, the null mutant palatal shelves did not fuse in vitro, but instead the medial edge epithelial cells survived at the midline position, and the basement membrane was resistant towards degradation. Supplementation of the culture medium with the mature form of TGF-beta3 was able to fully correct the defective fusion in the null mutant specimens. Our results demonstrate that the reason for the defective palatal fusion in TGF-beta3 (-/-) samples is not impaired adhesion. Our data define a specific role for TGF-beta3 in the events that control transdifferentiation of the medial edge epithelial cells including degradation of the underlying basement membrane.