Transcription factor playing important roles in primary neurulation and in the differentiation of stratified epithelia of both ectodermal and endodermal origin. Binds directly to the consensus DNA sequence 5'-AACCGGTT-3' acting as an activator and repressor on distinct target genes. Essential for epidermal differentiation and barrier formation at the end of embryogenesis with TGM3 as critical direct target (PubMed:21081122, PubMed:20654612, PubMed:25347468). Exhibits functional redundancy with GRHL2 in epidermal morphogenetic events such as eyelid fusion and epidermal wound repair (PubMed:21081122). Despite being dispensable during normal epidermal homeostasis in the adulthood, is again required for barrier repair after immune-mediated epidermal damage, regulates distinct gene batteries in embryonic epidermal differentiation and adult epidermal barrier reformation after injury (PubMed:25347468). Plays unique and cooperative roles with GRHL2 in establishing distinct zones of primary neurulation. Essential for spinal closure, functions cooperatively with GRHL2 in closure 2 (forebrain/midbrain boundary) and posterior neuropore closure (PubMed:14608380, PubMed:20654612). Also required for proper development of the oral periderm (PubMed:24360809). No genetic interaction with GRHL1, no functional cooperativity due to diverse target gene selectivity (PubMed:21081122). Homodimer, also forms heterodimers with GRHL1 and GRHL2 (By similarity). Interacts with LMO4 (PubMed:16949565). At 8.5 dpc, expression is confined to the non-neural ectoderm immediately adjacent to the neural plate, which was undergoing folding to form the neural tube. At later time points, more widespread expression is observed in the surface ectoderm, with a progressive increase until 15.5 dpc. Also expressed in other tissues lined by squamous epithelium, including the oral cavity, urogenital sinus and anal canal. Mutant pups display neural tube defects and don't survive to weaning. During embryogenesis, fail to form the epidermal barrier and exhibit defective neural tube closure and embryonic wound repair. The epidermis show a severe barrier function defect associated with impaired differentiation of the epidermis, including defects of the stratum corneum, extracellular lipid composition and cell adhesion in the granular layer. Embryos have thoracolumbosacral spina bifida and curled tail, and 2% have coincident exencephaly. Embryos are smaller than their control littermates, exhibit failed eyelid fusion, the penetrance of which is influenced by genetic background, and shorter intestine with blood in the lumen (PubMed:14608380, PubMed:16949565, PubMed:21081122). Embryos have oral bilateral epithelial adhesions because of the loss of periderm and a cleft palate in some cases (PubMed:24360809). LMO4:GRHL3 double knockout embryos show significantly more frequent exencephaly than that found in single knockouts. Similarly, open-eye phenotype was more penetrant in double knockout mice. Double mutants show an enhancement of the epidermal terminal differentiation defect (PubMed:16949565). GRHL genes (GRHL1, GRHL2 and GRHL3) show a paradoxal lack of redundancy despite their extensive sequence identity in the DNA-binding and protein dimerization domains and the fact that the core consensus DNA binding sites are identical. They have related but remarkably different functions during embryogenesis because of their differential spatiotemporal expression patterns during development. Belongs to the grh/CP2 family. Grainyhead subfamily.