Ankyloblepharon-ectodermal defects-cleft lip/palate (AEC) syndrome, which is characterized by cleft palate and severe defects of the skin, is an autosomal dominant disorder caused by mutations in the gene encoding transcription factor p63. Here, we report the generation of a knock-in mouse model for AEC syndrome (p63(+/L514F) ) that recapitulates the human disorder. The AEC mutation exerts a selective dominant-negative function on wild-type p63 by affecting progenitor cell expansion during ectodermal development leading to a defective epidermal stem cell compartment. These phenotypes are associated with impairment of fibroblast growth factor (FGF) signalling resulting from reduced expression of Fgfr2 and Fgfr3, direct p63 target genes. In parallel, a defective stem cell compartment is observed in humans affected by AEC syndrome and in Fgfr2b(-/-) mice. Restoring Fgfr2b expression in p63(+/L514F) epithelial cells by treatment with FGF7 reactivates downstream mitogen-activated protein kinase signalling and cell proliferation. These findings establish a functional link between FGF signalling and p63 in the expansion of epithelial progenitor cells and provide mechanistic insights into the pathogenesis of AEC syndrome.