In tooth morphogenesis, the dental epithelium and mesenchyme interact reciprocally for growth and differentiation to form the proper number and shapes of teeth. We previously identified epiprofin (Epfn), a gene preferentially expressed in dental epithelia, differentiated ameloblasts, and certain ectodermal organs. To identify the role of Epfn in tooth development, we created Epfn-deficient mice (Epfn-/-). Epfn-/- mice developed an excess number of teeth, enamel deficiency, defects in cusp and root formation, and abnormal dentin structure. Mutant tooth germs formed multiple dental epithelial buds into the mesenchyme. In Epfn-/- molars, rapid proliferation and differentiation of the inner dental epithelium were inhibited, and the dental epithelium retained the progenitor phenotype. Formation of the enamel knot, a signaling center for cusps, whose cells differentiate from the dental epithelium, was also inhibited. However, multiple premature nonproliferating enamel knot-like structures were formed ectopically. These dental epithelial abnormalities were accompanied by dysregulation of Lef-1, which is required for the normal transition from the bud to cap stage. Transfection of an Epfn vector promoted dental epithelial cell differentiation into ameloblasts and activated promoter activity of the enamel matrix ameloblastin gene. Our results suggest that in Epfn-deficient teeth, ectopic nonproliferating regions likely bud off from the self-renewable dental epithelium, form multiple branches, and eventually develop into supernumerary teeth. Thus, Epfn has multiple functions for cell fate determination of the dental epithelium by regulating both proliferation and differentiation, preventing continuous tooth budding and generation.