Zebrafish tgfbeta3 is strongly expressed in a subpopulation of the migrating neural crest cells, developing pharyngeal arches and neurocranial cartilages. To study the regulatory role of tgfbeta3 in head skeletal formation, we knocked down tgfbeta3 in zebrafish and found impaired craniofacial chondrogenesis, evident by malformations in selected neurocranial and pharyngeal arch cartilages. Over-expressing tgfbeta3 in embryos resulted in smaller craniofacial cartilages without any gross malformations. These defects suggest that tgfbeta3 is required for normal chondrogenesis. To address the cellular mechanisms that lead to the observed malformations, we analyzed cranial neural crest development in morphant and tgfbeta3 over-expressing fish. We observed reduced pre-migratory and migratory cranial neural crest, the precursors of the neurocranial cartilage and pharyngeal arches, in tgfbeta3 knockdown embryos. In contrast, only the migratory neural crest was reduced in embryos over-expressing tgfbeta3. This raised the possibility that the reduced number of cranial neural crest cells is a result of increased apoptosis. Consistent with this, markedly elevated TUNEL staining in the midbrain and hindbrain, and developing pharyngeal arch region was observed in morphants, while tgfbeta3 over-expressing embryos showed marginally increased apoptosis in the developing pharyngeal arch region. We propose that both Tgfbeta3 suppression and over-expression result in reduced chondrocyte and osteocyte formation, but to different degrees and through different mechanisms. In Tgfbeta3 suppressed embryos, this is due to impaired formation and survival of a subpopulation of cranial neural crest cells through markedly increased apoptosis in regions containing the cranial neural crest cells, while in Tgfbeta3 over-expressing embryos, the milder phenotype is also due to a slightly elevated apoptosis in these regions. Therefore, proper cranial neural crest formation and survival, and ultimately craniofacial chondrogenesis and osteogenesis, are dependent on tight regulation of Tgfbeta3 protein levels in zebrafish.