In vertebrates, cranial placodes contribute to all sense organs and sensory ganglia and arise from a common pool of Six1/Eya2+ progenitors. Here we dissect the events that specify ectodermal cells as placode progenitors using newly identified genes upstream of the Six/Eya complex. We show in chick that two different tissues, namely the lateral head mesoderm and the prechordal mesendoderm, gradually induce placode progenitors: cells pass through successive transcriptional states, each identified by distinct factors and controlled by different signals. Both tissues initiate a common transcriptional state but over time impart regional character, with the acquisition of anterior identity dependent on Shh signalling. Using a network inference approach we predict the regulatory relationships among newly identified transcription factors and verify predicted links in knockdown experiments. Based on this analysis we propose a new model for placode progenitor induction, in which the initial induction of a generic transcriptional state precedes regional divergence.