Cleft lip and palate are common birth defects resulting from failure of the facial processes to fuse during development. The mammalian grainyhead-like (Grhl1-3) genes play key roles in a number of tissue fusion processes including neurulation, epidermal wound healing and eyelid fusion. One family member, Grhl2, is expressed in the epithelial lining of the first pharyngeal arch in mice at embryonic day (E)10.5, prompting analysis of the role of this factor in palatogenesis. Grhl2-null mice die at E11.5 with neural tube defects and a cleft face phenotype, precluding analysis of palatal fusion at a later stage of development. However, in the first pharyngeal arch of Grhl2-null embryos, dysregulation of transcription factors that drive epithelial-mesenchymal transition (EMT) occurs. The aberrant expression of these genes is associated with a shift in RNA-splicing patterns that favours the generation of mesenchymal isoforms of numerous regulators. Driving the EMT perturbation is loss of expression of the EMT-suppressing transcription factors Ovol1 and Ovol2, which are direct GRHL2 targets. The expression of the miR-200 family of microRNAs, also GRHL2 targets, is similarly reduced, resulting in a 56-fold upregulation of Zeb1 expression, a major driver of mesenchymal cellular identity. The critical role of GRHL2 in mediating cleft palate in Zeb1−/− mice is evident, with rescue of both palatal and facial fusion seen in Grhl2−/−;Zeb1−/− embryos. These findings highlight the delicate balance between GRHL2/ZEB1 and epithelial/mesenchymal cellular identity that is essential for normal closure of the palate and face. Perturbation of this pathway may underlie cleft palate in some patients.