Developmental origins of the neural crest (NC), a quintessential and pluripotent vertebrate cell type, has historically been a topic of extensive investigation but continues to remain poorly understood. In the zebrafish embryo, NC and primary sensory neurons are thought to segregate from a common population of progenitor cells in response to lateral inhibition. Here, we show that the zebrafish homolog of the B-lymphocyte-induced maturation protein (Blimp-1) gene, u-boot (ubo), is induced by BMP signaling in cells at the boundary of the neural plate and nonneural ectoderm. Loss of Ubo activity not only inhibits specification of the NC but also impairs development of the primary sensory neurons. Conversely, misexpression of ubo results in the generation of supernumerary primary sensory neurons consistent with this cell type representing the default fate within the progenitor equivalence group. These results establish a link between the activity of the transcriptional regulator Blimp-1 and the inductive effects of BMP signaling in the inception of NC progenitor fate.