Cranial placodes are focal regions of thickened ectoderm in the head of vertebrate embryos that give rise to a wide variety of cell types, including elements of the paired sense organs and neurons in cranial sensory ganglia. They are essential for the formation of much of the cranial sensory nervous system. Although relatively neglected today, interest in placodes has recently been reawakened with the isolation of molecular markers for different stages in their development. This has enabled a more finely tuned approach to the understanding of placode induction and development and in some cases has resulted in the isolation of inducing molecules for particular placodes. Both morphological and molecular data support the existence of a preplacodal domain within the cranial neural plate border region. Nonetheless, multiple tissues and molecules (where known) are involved in placode induction, and each individual placode is induced at different times by a different combination of these tissues, consistent with their diverse fates. Spatiotemporal changes in competence are also important in placode induction. Here, we have tried to provide a comprehensive review that synthesises the highlights of a century of classical experimental research, together with more modern evidence for the tissues and molecules involved in the induction of each placode.