The sensory patches in the vertebrate inner ear are similar in function to the mechanosensory bristles of a fly, and consist of a similar set of cell types. If they are truly homologous structures, they should also develop by similar mechanisms. We examine the genesis of the neurons, hair cells and supporting cells that form the sensory patches in the inner ear of the chick. These all arise from the otic epithelium, and are produced normally even in otic epithelium cultured in isolation, confirming that their production is governed by mechanisms intrinsic to the epithelium. First, the neuronal sublineage becomes separate from the epithelial: between E2 and E3.5, neuroblasts delaminate from the otocyst. The neuroblasts then give rise to a mixture of neurons and neuroblasts, while the sensory epithelial cells diversify to form a mixture of hair cells and supporting cells. The epithelial patches where this occurs are marked from an early stage by uniform and maintained expression of the Notch ligand Serrate1. The Notch ligand Delta1 is also expressed, but transiently and in scattered cells: it is seen both early, during neuroblast segregation, where it appears to be in the nascent neuroblasts, and again later, in the ganglion and in differentiating sensory patches, where it appears to be in the nascent hair cells, disappearing as they mature. Delta-Notch-mediated lateral inhibition may thus act at each developmental branchpoint to drive neighbouring cells along different developmental pathways. Our findings indicate that the sensory patches of the vertebrate inner ear and the sensory bristles of a fly are generated by minor variations of the same basic developmental program, in which cell diversification driven by Delta-Notch and/or Serrate-Notch signalling plays a central part.