The epibranchial placodes are cranial, ectodermal thickenings that give rise to sensory neurons of the peripheral nervous system. Despite their importance in the developing animal, the signals responsible for their induction remain unknown. Using the placodal marker, sox3, we have shown that the same Fgf signaling required for otic vesicle development is required for the development of the epibranchial placodes. Loss of both Fgf3 and Fgf8 is sufficient to block placode development. We further show that epibranchial sox3 expression is unaffected in mutants in which no otic placode forms, where dlx3b and dlx4b are knocked down, or deleted along with sox9a. However, the forkhead factor, Foxi1, is required for both otic and epibranchial placode development. Thus, both the otic and epibranchial placodes form in a common region of ectoderm under the influence of Fgfs, but these two structures subsequently develop independently. Although previous studies have investigated the signals that trigger neurogenesis from the epibranchial placodes, this represents the first demonstration of the signaling events that underlie the formation of the placodes themselves, and therefore, the process that determines which ectodermal cells will adopt a neural fate.