Skeletal mesenchymal stem cells (MSCs) possess self-renewal capacities and play a leading role in the craniofacial system. However, their engagement in controlling cranial bone development and regeneration remains largely unidentified. Herein, we discovered the neurofibromin 2 (Nf2)-encoded regulator Merlin, demonstrating indispensableness in the craniofacial system. Mice lacking Nf2 in MSCs exhibit malformed cranial bones, diminished proliferation, increased apoptosis, and more severe osteogenesis impairment. Mechanically, we substantiate that Nf2 physically interacts with focal adhesion kinase (FAK) to preferentially mediate Erk1/2 and PI3K catalytic p110 subunit/Akt signaling. Meanwhile, Nf2-FAK disturbance in MSCs results in deficient migration, cytoskeletal organization and focal adhesion dynamics, and develops retarded regeneration of cranial bone defects. Collectively, our findings underscore an unrecognized scaffolding role for Nf2-FAK as upstream element in regulating PI3K/Akt and Erk1/2 action in osteoblasts, and illuminate its essentialness in coordinating cell migration, osteogenic lineage development, cranial bone ossification and regeneration.