Mutations of the protocadherins, FAT4 and DCHS1, result in Van Maldergem’s syndrome characterized, in part, by craniofacial abnormalities. Here we analyse the role of Dchs1-Fat4 signalling during osteoblast differentiation. We show that Fat4 and Dchs1 mutants mimic the craniofacial phenotype of the human syndrome and that Dchs1-Fat4 signalling is essential for osteoblast differentiation. In Dchs1/Fat4 mutants, proliferation of osteoprogenitors is increased and osteoblast differentiation is delayed. We show that loss of Dchs1-Fat4 signalling is linked to increased Yap-Tead activity and that Yap is expressed and required for proliferation in osteoprogenitors. In contrast, Taz is expressed in more committed Runx2-expressing osteoblasts, Taz does not regulate osteoblast proliferation and Taz-Tead activity is unaffected in Dchs1/Fat4 mutants. Finally, we show that Yap and Taz differentially regulate the transcriptional activity of Runx2, and that the activity of Yap-Runx2 and that Taz-Runx2 complexes is altered in Dchs1/Fat4 mutant osteoblasts. In conclusion, these data identify Dchs1-Fat4 as a new signaling pathway in osteoblast differentiation, reveal its critical role within the early Runx2 progenitors, and identify distinct requirements for Yap and Taz during osteoblast differentiation.