Homeodomain-containing transcription factors Dlx5 and Msx2 are able to form a heterodimer, and together can regulate embryonic development including skeletogenesis. Dlx5 functions as a transcriptional activator and Msx2 a transcriptional repressor, and they share common target genes. During mouse digit development, the expression domains of Dlx5 and Msx2 overlap at the distal region of the developing terminal phalange, although digit formation and regeneration are not altered in the Dlx5 and Msx2 null mutant embryos. Interestingly, we observed a high rate of defects in neural tube formation in Dlx5 and Msx2 double null mutants. In the absence of both Dlx5 and Msx2, a high occurrence of exencephaly and severe defects in craniofacial morphology are observed. Additionally, Dlx5 and Msx2 expression domain analysis showed overlap of the genes at the apex of the neural folds just prior to neural fold fusion. The expression patterns of ephrinA5 and two isoforms of EphA7 were tested as downstream targets of Dlx5 and Msx2. Results show that EphrinA5 and the truncated isoform of EphA7 are regulated by Dlx5 and Msx2 together, although the full length isoform of EphA7 expression is not altered. Overall, these data show that Dlx5 and Msx2 play a critical role in controlling cranial neural tube morphogenesis by regulating cell adhesion via the ephrinA5 and EphA7 pathway.