Cleft palate is caused by the failure of palatal midline epithelial cells to disintegrate, which is necessary for palatal mesenchymal confluence. Although 2,3,7,8-Tetrachlorodibenzo-p-dioxin (TCDD) exposure is linked to cleft palate at a high rate, the mechanism remains to be elucidated. The present study was designed to determine the effects of TCDD on the fate of epithelial cell isolated from human fetal palatal shelves (hFPECs). We demonstrate that TCDD increased cell proliferation and promoted the progression of cells from G1 to S phase as well as increased the number of cells entering the G2/M phase. We found that TCDD has no measurable effect on apoptosis of hFPECs. The protein level assays revealed that TCDD increased cyclin-dependent kinases 4 (cdk4), cyclin D1, cyclin E and p21 (Waf1/Cip1) but not cdk2, bcl-2, cyclin B1 and cyclin A. Furthermore, TCDD activated PI3K/AKT signaling, and the PI3K inhibitor, LY294002, partially abrogated TCDD-induced cell proliferation and gene modulations. TCDD treatment increased CYP1A1 mRNA and protein levels, which indicated the activation of AhR signaling. Knockdown of the AhR with siRNA suppressed TCDD-induced cell proliferation and PI3K/AKT signaling activation. Taken together, these data demonstrated that TCDD is able to promote growth of hFPECs through AhR-dependent activation of the PI3K/AKT pathway, which may account for the underlying mechanism by which TCDD causes a failure of palatal fusion.