Cleft palate, including submucous cleft palate, is among the most common birth defects in humans. While overt cleft palate results from defects in growth or fusion of the developing palatal shelves, submucous cleft palate is characterized by defects in palatal bones. In this report, we show that the Bmpr1a gene, encoding a type I receptor for bone morphogenetic proteins (Bmp), is preferentially expressed in the primary palate and anterior secondary palate during palatal outgrowth. Following palatal fusion, Bmpr1a mRNA expression was upregulated in the condensed mesenchyme progenitors of palatal bone. Tissue-specific inactivation of Bmpr1a in the developing palatal mesenchyme in mice caused reduced cell proliferation in the primary and anterior secondary palate, resulting in partial cleft of the anterior palate at birth. Expression of Msx1 and Fgf10 was downregulated in the anterior palate mesenchyme and expression of Shh was downregulated in the anterior palatal epithelium in the Bmpr1a conditional mutant embryos, indicating that Bmp signaling regulates mesenchymal-epithelial interactions during palatal outgrowth. In addition, formation of the palatal processes of the maxilla was blocked while formation of the palatal processes of the palatine was significantly delayed, resulting in submucous cleft of the hard palate in the mutant mice. Our data indicate that Bmp signaling plays critical roles in the regulation of palatal mesenchyme condensation and osteoblast differentiation during palatal bone formation.