Transforming growth factor beta (TGF-β) proteins play important roles in morphogenesis of many craniofacial tissues; however, detailed biological mechanisms of TGF-β action, particularly in vivo, are still poorly understood. Here, we deleted the TGF-β type I receptor gene Alk5 specifically in the embryonic ectodermal and neural crest cell lineages. Failure in signaling via this receptor, either in the epithelium or in the mesenchyme, caused severe craniofacial defects including cleft palate. Moreover, the facial phenotypes of neural crest-specific Alk5 mutants included devastating facial cleft and appeared significantly more severe than the defects seen in corresponding mutants lacking the TGF-β type II receptor (TGFβRII), a prototypical binding partner of ALK5. Our data indicate that ALK5 plays unique, non-redundant cell-autonomous roles during facial development. Remarkable divergence between Tgfbr2 and Alk5 phenotypes, together with our biochemical in vitro data, imply that (1) ALK5 mediates signaling of a diverse set of ligands not limited to the three isoforms of TGF-β, and (2) ALK5 acts also in conjunction with type II receptors other than TGFβRII.