The simple primordium of the inner ear (otocyst) differentiates into many cell types, including sensory neurons and hair cells. We examined expression of the divergent homeobox transcription factor, cProx1, during otocyst development in chickens. Nuclear cProx1 protein is not evident in the otic placode but emerges in the otic cup by stage 12. At stage 16, cProx1-positive nuclei are scattered continuously throughout the neuroepithelium, from anteroventral to posteromedial. These labeled cells are neural precursors; they express betaIII-tubulin and migrate to the cochleovestibular ganglion between stages 13 and 21. By stage 18, two areas develop a dense pattern of cProx1 expression in which every nucleus is labeled. These areas emerge at the anterior and posterior extremes of the band of scattered cProx1 expression and express the sensory markers cSerrate1 and Cath1 by stage 23. Four discrete patches of dense cProx1 expression appear by stage 23 that correspond to the future superior crista, lateral crista, saccular macula, and posterior crista, as confirmed by immunolabeling for hair cell antigen (HCA) by stage 29. The remaining sensory epithelia display a dense pattern of cProx1 expression and label for HCA by stage 29. In the basilar papilla, nuclear cProx1 expression is down-regulated in most hair cells by stage 37 and in many supporting cells by stage 40. Our findings show that regions of the otocyst that give rise to neurons or hair cells are distinguished by their relative density of cProx1-positive nuclei, and suggest a role for cProx1 in the genesis of these cell types.