FOXE1 mutations cause the Bamforth-Lazarus syndrome characterized by thyroid and craniofacial defects. Although a pioneer activity of FOXE1 in thyroid development has been reported, FOXE1 regulation in other contexts remains unexplored. We pointed to: (i) a role of FOXE1 in controlling the expression of MSX1 and TGF-β3 relevant in craniofacial development and (ii) a causative part of FOXE1 mutations or mice Foxe1(-/-) genotype in the pathogenesis of cleft palate in the Bamforth-Lazarus syndrome. The MSX1 and TGF-β3 up-regulation in response to FOXE1 at both transcriptional and translational levels and the recruitment of FOXE1 to specific binding motifs, together with the transactivation of the promoters of these genes, indicate that MSX1 and TGF-β3 are direct FOXE1 targets. Moreover, we showed that all the known forkhead-domain mutations, but not the polyalanine-stretch polymorphisms, affect the FOXE1 ability to bind to and transactivate MSX1 and TGF-β3 promoters. In 14-day Foxe1(-/-) mice embryos, Tgf-β3 and Msx1 mRNAs were almost absent in palatal shelves compared with Foxe1(+/-) embryos. Our findings give new insights into the genetic mechanisms underlying the Bamforth-Lazarus syndrome-associated facial defects.