The interplay between intrinsic and extrinsic factors is essential for the transit into different cell states during development. We have analyzed the expression and function of FGF10 and FGF-signaling during the early stages of the development of otic neurons. FGF10 is expressed in a highly restricted domain overlapping the presumptive neurogenic region of the chick otic placode. A detailed study of the expression pattern of FGF10, proneural, and neurogenic genes revealed the following temporal sequence for the onset of gene expression: FGF10>Ngn1/Delta1/Hes5>NeuroD/NeuroM. FGF10 and FGF receptor inhibition cause opposed effects on cell determination and cell proliferation. Ectopic expression of FGF10 in vivo promotes an increase in NeuroD and NeuroM expression. BrdU incorporation experiments showed that the increase in NeuroD-expressing cells is not due to an increase in cell proliferation. Inhibition of FGF receptor signaling in otic explants causes a severe reduction in Neurogenin1, NeuroD, Delta1, and Hes5 expression with no change in non-neural genes like Lmx1. However, it does not interfere with NeuroD expression within the CVG or with neuroblast delamination. The loss of proneural gene expression caused by FGF inhibition is not caused by decreased cell proliferation or by increased cell death. We suggest that FGF signaling in the otic epithelium is required for neuronal precursors to withdraw from cell division and irreversibly commit to neuronal fate.