Neural crest cells are multipotential stem cells that contribute extensively to vertebrate development and give rise to various cell and tissue types. Determination of the fate of mammalian neural crest has been inhibited by the lack of appropriate markers. Here, we make use of a two-component genetic system for indelibly marking the progeny of the cranial neural crest during tooth and mandible development. In the first mouse line, Cre recombinase is expressed under the control of the Wnt1 promoter as a transgene. Significantly, Wnt1 transgene expression is limited to the migrating neural crest cells that are derived from the dorsal CNS. The second mouse line, the ROSA26 conditional reporter (R26R), serves as a substrate for the Cre-mediated recombination. Using this two-component genetic system, we have systematically followed the migration and differentiation of the cranial neural crest (CNC) cells from E9.5 to 6 weeks after birth. Our results demonstrate, for the first time, that CNC cells contribute to the formation of condensed dental mesenchyme, dental papilla, odontoblasts, dentine matrix, pulp, cementum, periodontal ligaments, chondrocytes in Meckel's cartilage, mandible, the articulating disc of temporomandibular joint and branchial arch nerve ganglia. More importantly, there is a dynamic distribution of CNC- and non-CNC-derived cells during tooth and mandibular morphogenesis. These results are a first step towards a comprehensive understanding of neural crest cell migration and differentiation during mammalian craniofacial development. Furthermore, this transgenic model also provides a new tool for cell lineage analysis and genetic manipulation of neural-crest-derived components in normal and abnormal embryogenesis.