Cleft palate is one of the most common human birth defects and is associated with multiple genetic and environmental risk factors. Although mutations in the genes encoding transforming growth factor beta (TGFβ) signaling molecules and interferon regulatory factor 6 (Irf6) have been identified as genetic risk factors for cleft palate, little is known about the relationship between TGFβ signaling and IRF6 activity during palate formation. Here, we show that TGFβ signaling regulates expression of Irf6 and the fate of the medial edge epithelium (MEE) during palatal fusion in mice. Haploinsufficiency of Irf6 in mice with basal epithelial-specific deletion of the TGFβ signaling mediator Smad4 (Smad4^fl/fl;K14-Cre;Irf6^+/R84C) results in compromised p21 expression and MEE persistence, similar to observations in Tgfbr2^fl/fl;K14-Cre mice, although the secondary palate of Irf6^+/R84C and Smad4^fl/fl;K14-Cre mice form normally. Furthermore, Smad4^fl/fl;K14-Cre;Irf6^+/R84C mice show extra digits that are consistent with abnormal toe and nail phenotypes in individuals with Van der Woude and popliteal pterygium syndromes, suggesting that the TGFβ/SMAD4/IRF6 signaling cascade might be a well-conserved mechanism in regulating multiple organogenesis. Strikingly, overexpression of Irf6 rescued p21 expression and MEE degeneration in Tgfbr2^fl/fl;K14-Cre mice. Thus, IRF6 and SMAD4 synergistically regulate the fate of the MEE, and TGFβ-mediated Irf6 activity is responsible for MEE degeneration during palatal fusion in mice.