Transforming growth factor-beta (Tgf-beta) signaling is crucial for regulating craniofacial development. Loss of Tgf-beta signaling results in defects in cranial neural crest cells (CNCC), but the mechanism by which Tgf-beta signaling regulates bone formation in CNCC-derived osteogenic cells remains largely unknown. In this study, we discovered that Tgf-beta regulates the basal transcriptional regulatory machinery to control intramembranous bone development. Specifically, basal transcription factor Taf4b is down-regulated in the CNCC-derived intramembranous bone in Tgfbr2(fl/fl);Wnt1-Cre mice. Tgf-beta specifically induces Taf4b expression. Moreover, small interfering RNA knockdown of Taf4b results in decreased cell proliferation and altered osteogenic differentiation in primary mouse embryonic maxillary mesenchymal cells, as seen in Tgfbr2 mutant cells. In addition, we show that Taf1 is decreased at the osteogenic initiation stage in the maxilla of Tgfbr2 mutant mice. Furthermore, small interfering RNA knockdown of Taf4b and Taf1 together in primary mouse embryonic maxillary mesenchymal cells results in up-regulated osteogenic initiator Runx2 expression, with decreased cell proliferation and altered osteogenic differentiation. Our results indicate a critical function of Tgf-beta-mediated basal transcriptional factors in regulating osteogenic cell proliferation and differentiation in CNCC-derived osteoprogenitor cells during intramembranous bone formation.