Neural crest cells are a vertebrate-specific migratory, multipotent cell population that give rise to a diverse array of cells and tissues during development. Cranial neural crest cells, in particular, generate cartilage, bone, tendons and connective tissue in the head and face as well as neurons, glia and melanocytes. In this review, we focus on the chondrogenic and osteogenic potential of cranial neural crest cells and discuss the roles of Sox9, Runx2 and Msx1/2 transcription factors and WNT, FGF and TGFβ signaling pathways in regulating neural crest cell differentiation into cartilage and bone. We also describe cranioskeletal defects and disorders arising from gain or loss-of-function of genes that are required for patterning and differentiation of cranial neural crest cells. Finally, we discuss the evolution of skeletogenic potential in neural crest cells and their function as a conduit for intraspecies and interspecies variation, and the evolution of craniofacial novelties.