In the developing vertebrate nervous system, both neural crest and sensory neurons form at the boundary between non-neural ectoderm and the neural plate. From an in situ hybridization based expression analysis screen, we have identified a novel zebrafish mutation, narrowminded (nrd), which reduces the number of early neural crest cells and eliminates Rohon-Beard (RB) sensory neurons. Mosaic analysis has shown that the mutation acts cell autonomously suggesting that nrd is involved in either the reception or interpretation of signals at the lateral neural plate boundary. Characterization of the mutant phenotype indicates that nrd is required for a primary wave of neural crest cell formation during which progenitors generate both RB sensory neurons and neural crest cells. Moreover, the early deficit in neural crest cells in nrd homozygotes is compensated later in development. Thus, we propose that a later wave can compensate for the loss of early neural crest cells but, interestingly, not the RB sensory neurons. We discuss the implications of these findings for the possibility that RB sensory neurons and neural crest cells share a common evolutionary origin.