The sensory organs of the vertebrate head derive from two embryological structures, the neural crest and the ectodermal placodes. Although quite a lot is known about the secreted and transcription factors that regulate neural crest development, until recently little was known about the molecular pathways that regulate placode development. Herein we review recent findings on the induction and specification of the pre-placodal ectoderm, and the transcription factors that are involved in regulating placode fate and initial differentiation.