All ectodermal organs, e.g. hair, teeth, and many exocrine glands, originate from two adjacent tissue layers: the epithelium and the mesenchyme. Similar sequential and reciprocal interactions between the epithelium and mesenchyme regulate the early steps of development in all ectodermal organs. Generally, the mesenchyme provides the first instructive signal, which is followed by the formation of the epithelial placode, an early signaling center. The placode buds into or out of the mesenchyme, and subsequent proliferation, cell movements, and differentiation of the epithelium and mesenchyme contribute to morphogenesis. The molecular signals regulating organogenesis, such as molecules in the FGF, TGFbeta, Wnt, and hedgehog families, regulate the development of all ectodermal appendages repeatedly during advancing morphogenesis and differentiation. In addition, signaling by ectodysplasin, a recently identified member of the TNF family, and its receptor Edar is required for ectodermal organ development across vertebrate species. Here the current knowledge on the molecular regulation of the initiation, placode formation, and morphogenesis of ectodermal organs is discussed with emphasis on feathers, hair, and teeth.