Sequential and reciprocal epithelial-mesenchymal interactions govern the development of most tissues and organs of the craniofacial region. Bone morphogenetic proteins (BMPs) are members of the transforming growth factor-beta family of secreted signaling molecules that have long been implied to have a significant contribution in this process. However, evidence for such a role during craniofacial development is largely missing. Using a lacZ reporter mouse we mapped the spatiotemporal expression of BMP7 in the developing craniofacial region. The observed pattern suggested a potential involvement of BMP7 in epithelial-mesenchymal interactions and thus a direct role for this molecule in the development of ectodermal appendages (teeth, hair follicle, lachrymal and sweat glands, taste buds) and, furthermore, palatal formation. To correlate the expression to function we analyzed germline deleted conditional BMP7-deficient embryos for malformations. We found developmental defects in many craniofacial structures such as teeth, eyes, whiskers, hair follicles, salivary glands, and palate. These findings place BMP7 as a central mediator of epithelial-mesenchymal interactions that are necessary for the correct development of structures belonging to the orofacial complex. J. Exp. Zool. (Mol. Dev. Evol.) 310B, 2009. (c) 2009 Wiley-Liss, Inc.