Cranial placodes are specialized regions of the ectoderm, which give rise to various sensory ganglia and contribute to the pituitary gland and sensory organs of the vertebrate head. They include the adenohypophyseal, olfactory, lens, trigeminal, and profundal placodes, a series of epibranchial placodes, an otic placode, and a series of lateral line placodes. After a long period of neglect, recent years have seen a resurgence of interest in placode induction and specification. There is increasing evidence that all placodes despite their different developmental fates originate from a common panplacodal primordium around the neural plate. This common primordium is defined by the expression of transcription factors of the Six1/2, Six4/5, and Eya families, which later continue to be expressed in all placodes and appear to promote generic placodal properties such as proliferation, the capacity for morphogenetic movements, and neuronal differentiation. A large number of other transcription factors are expressed in subdomains of the panplacodal primordium and appear to contribute to the specification of particular subsets of placodes. This review first provides a brief overview of different cranial placodes and then synthesizes evidence for the common origin of all placodes from a panplacodal primordium. The role of various transcription factors for the development of the different placodes is addressed next, and it is discussed how individual placodes may be specified and compartmentalized within the panplacodal primordium. Finally, tissues and signals involved in placode induction are summarized with a special focus on induction of the panplacodal primordium itself (generic placode induction) and its relation to neural induction and neural crest induction. Integrating current data, new models of generic placode induction and of combinatorial placode specification are presented.