Genome-wide identification of bona-fide targets of transcription factors in mammalian cells is still a challenge. We present a novel integrated computational and experimental approach to identify direct targets of a transcription factor. This consists of measuring time-course (dynamic) gene expression profiles upon perturbation of the transcription factor under study, and in applying a novel “reverse-engineering” algorithm (TSNI) to rank genes according to their probability of being direct targets. Using primary keratinocytes as a model system, we identified novel transcriptional target genes of TRP63, a crucial regulator of skin development. TSNI-predicted TRP63 target genes were validated by Trp63 knockdown and by ChIP-chip to identify TRP63-bound regions in vivo. Our study revealed that short sampling times, in the order of minutes, are needed to capture the dynamics of gene expression in mammalian cells. We show that TRP63 transiently regulates a subset of its direct targets, thus highlighting the importance of considering temporal dynamics when identifying transcriptional targets. Using this approach, we uncovered a previously unsuspected transient regulation of the AP-1 complex by TRP63 through direct regulation of a subset of AP-1 components. The integrated experimental and computational approach described here is readily applicable to other transcription factors in mammalian systems and is complementary to genome-wide identification of transcription-factor binding sites.