Transforming growth factor β (TGF-β) signaling plays crucial functions in the regulation of craniofacial development, including palatogenesis. Here, we have identified connective tissue growth factor (Ctgf) as a downstream target of the TGF-β signaling pathway in palatogenesis. The pattern of Ctgf expression in wild-type embryos suggests that it may be involved in key processes during palate development. We found that Ctgf expression is downregulated in both Wnt1-Cre; Tgfbr2(fl/fl) and Osr2-Cre; Smad4(fl/fl) palates. In Tgfbr2 mutant embryos, downregulation of Ctgf expression is associated with p38 mitogen-activated protein kinase (MAPK) overactivation, whereas loss of function of Smad4 itself leads to downregulation of Ctgf expression. We also found that CTGF regulates its own expression via TGF-β signaling. Osr2-Cre; Smad4(fl/fl) mice exhibit a defect in cell proliferation similar to that of Tgfbr2 mutant mice, as well as cleft palate. We detected no alteration in bone morphogenetic protein (BMP) downstream targets in Smad4 mutant palates, suggesting that the reduction in cell proliferation is due to defective transduction of TGF-β signaling via decreased Ctgf expression. Significantly, an exogenous source of CTGF was able to rescue the cell proliferation defect in both Tgfbr2 and Smad4 mutant palates. Collectively, our data suggest that CTGF regulates proliferation as a mediator of the canonical pathway of TGF-β signaling during palatogenesis.