The disappearance of palatal medial edge epithelium (MEE) after fusion of secondary palatal shelves is often cited as a classical example of embryonic remodeling by programmed cell death. We reinvestigated this phenomenon in 16-day rat embryos, using light and electron microscopy. We confirm reports that the periderm of the two-layered MEE begins to slough after shelves assume horizontal positions. In vitro, peridermal cells are not able to slough and are trapped during the adhesion process. In vivo, however, surface cells shed before the shelves in the anterior palate adhere, allowing junctions to form between opposing basal epithelial cells. Midline seams so formed consist of two layers of basal cells, all of which appear healthy. Even though its cells are dividing, growth of the seam fails to keep pace with palatal growth and it thins to one layer of cells, and then breaks up into small islands. The basal lamina disappears and elongating MEE cells extend filopodia into adjacent connective tissue. Electron micrographs reveal transitional steps in loss of epithelial characteristics and gain of fibroblast-like features by transforming MEE cells. One such feature, observed with the aid of immunofluorescence, is the turn of the mesenchymal cytoskeletal protein, vimentin. No cell death or macrophages are observed after adhesion and thinning over most of the palate. These data indicate that MEE is an ectoderm that retains the ability to transform into mesenchymal cells. Epithelial-mesenchymal transformation may be expressed in other embryonic remodelings (R.L. Trelstad, A. Hayashi, K. Hayashi, and P.K. Donahue, 1982, Dev. Biol. 92, 27), resulting in heretofore unsuspected conservation of embryonic cell populations.