Failure of palatogenesis results in cleft palate, one of the most common congenital disabilities in humans. During the final phases of palatogenesis, the protective function of the peridermal cell layer must be eliminated for the medial edge epithelia to adhere properly, which is a prerequisite for the successful fusion of the secondary palate. However, a deeper understanding of the role and fate of the periderm in palatal adherence and fusion has been hampered due to a lack of appropriate periderm-specific genetic tools to examine this cell type in vivo. Here we used the cytokeratin-6A (Krt-6a) locus to develop both constitutive (Krt6ai-Cre) and inducible (Krt6ai-CreERT2) periderm-specific Cre driver mouse lines. These novel lines allowed us to achieve both the spatial and temporal control needed to dissect the periderm fate on a cellular resolution during palatogenesis. Our studies suggest that, already before the opposing palatal shelves contact each other, at least some palatal periderm cells start to gradually lose their squamous periderm-like phenotype and dedifferentiate into cuboidal cells, reminiscent of the basal epithelial cells seen in the palatal midline seam. Moreover, we show that transforming growth factor-β (TGF-β) signaling plays a critical periderm-specific role in palatogenesis. Thirty-three percent of embryos lacking a gene encoding the TGF-β type I receptor (Tgfbr1) in the periderm display a complete cleft of the secondary palate. Our subsequent experiments demonstrated that Tgfbr1-deficient periderm fails to undergo appropriate dedifferentiation. These studies define the periderm cell fate during palatogenesis and reveal a novel, critical role for TGF-β signaling in periderm dedifferentiation, which is a prerequisite for appropriate palatal epithelial adhesion and fusion.