Development of the mammalian secondary palate involves multiple steps of highly regulated morphogenetic processes that are frequently disturbed during human development, resulting in the common birth defect of cleft palate. Neither the molecular processes governing normal palatogenesis nor the causes of cleft palate is well understood. In an expression screen to identify new transcription factors regulating palate development, we previously isolated the odd-skipped related 2 (Osr2) gene, encoding a zinc-finger protein homologous to the Drosophila odd-skipped gene product, and showed that Osr2 mRNA expression is specifically activated in the nascent palatal mesenchyme at the onset of palatal outgrowth. We report that a targeted null mutation in Osr2 impairs palatal shelf growth and causes delay in palatal shelf elevation, resulting in cleft palate. Whereas palatal outgrowth initiates normally in the Osr2 mutant embryos, a significant reduction in palatal mesenchyme proliferation occurs specifically in the medial halves of the downward growing palatal shelves at E13.5, which results in retarded, mediolaterally symmetric palatal shelves before palatal shelf elevation. The developmental timing of palatal growth retardation correlates exactly with the spatiotemporal pattern of Osr1 gene expression during palate development. Furthermore, we show that the Osr2 mutants exhibit altered gene expression patterns, including those of Osr1, Pax9 and Tgfb3, during palate development. These data identify Osr2 as a key intrinsic regulator of palatal growth and patterning.