The sense organs of the vertebrate head comprise structures as varied as the eye, inner ear, and olfactory epithelium. In the early embryo, these assorted structures share a common developmental origin within the preplacodal region and acquire specific characteristics only later. Here we demonstrate a fundamental similarity in placodal precursors: in the chick all are specified as lens prior to acquiring features of specific sensory or neurogenic placodes. Lens specification becomes progressively restricted in the head ectoderm, initially by FGF and subsequently by signals derived from migrating neural crest cells. We show that FGF8 from the anterior neural ridge is both necessary and sufficient to promote olfactory fate in adjacent ectoderm. Our results reveal that placode precursors share a common ground state as lens and progressive restriction allows the full range of placodal derivatives to form.