Neural crest cells (NCCs) are multipotent stem cells that can differentiate into multiple cell types, including the osteoblasts and chondrocytes, and constitute most of the craniofacial skeleton. Here, we show through in vitro and in vivo studies that the transcriptional regulators Yap and Taz have redundant functions as key determinants of the specification and differentiation of NCCs into osteoblasts or chondrocytes. Primary and cultured NCCs deficient in Yap and Taz switched from osteogenesis to chondrogenesis, and NCC-specific deficiency for Yap and Taz resulted in bone loss and ectopic cartilage in mice. Yap bound to the regulatory elements of key genes that govern osteogenesis and chondrogenesis in NCCs and directly regulated the expression of these genes, some of which also contained binding sites for the TCF/LEF transcription factors that interact with the Wnt effector β-catenin. During differentiation of NCCs in vitro and NCC-derived osteogenesis in vivo, Yap and Taz promoted the expression of osteogenic genes such as Runx2 and Sp7 but repressed the expression of chondrogenic genes such as Sox9 and Col2a1. Furthermore, Yap and Taz interacted with β-catenin in NCCs to coordinately promote osteoblast differentiation and repress chondrogenesis. Together, our data indicate that Yap and Taz promote osteogenesis in NCCs and prevent chondrogenesis, partly through interactions with the Wnt-β-catenin pathway.