Normal fusion of developing eyelids requires coordination of inductive signals from the eyelid mesenchyme with migration of the periderm cell layer and constriction of the eyelids across the eye. Failure of this process results in an eyelids open at birth (EOB) phenotype in mice. We have identified a novel spontaneous allele of Alx4 that displays EOB, in addition to polydactyly and cranial malformations. Alx4 is expressed in the eyelid mesenchyme prior to and during eyelid fusion in a domain overlapping the expression of genes that also play a role in normal eyelid development. We show that Alx4 mutant mice have reduced expression of Fgf10, a key factor expressed in the mesenchyme that is required for initiation of eyelid fusion by the periderm. This is accompanied by a reduced number of periderm cells expressing phosphorylated c-Jun, consistent with the incomplete ablation of Fgf10 expression. Together, these data demonstrate that eyelid fusion in mice requires the expression of Alx4, accompanied by the loss of normal expression of essential components of the eyelid fusion pathway.