Sensory placodes are unique columnar epithelia with neurogenic potential that develop in the vertebrate head ectoderm next to the neural tube. They contribute to the paired sensory organs and the cranial sensory ganglia generating a wide variety of cell types ranging from lens fibres to sensory receptor cells and neurons. Although progress has been made in recent years to identify the molecular players that mediate placode specification, induction and patterning, the processes that initiate placode development are not well understood. One hypothesis suggests that all placode precursors arise from a common territory, the pre-placodal region, which is then subdivided to generate placodes of specific character. This model implies that their induction begins through molecular and cellular mechanisms common to all placodes. Embryological and molecular evidence suggests that placode induction is a multi-step process and that the molecular networks establishing the pre-placodal domain as well as the acquisition of placodal identity are surprisingly similar to those used in Drosophila to specify sensory structures.