Neurons of the Statoacoustic Ganglion (SAG), which innervate the inner ear, originate as neuroblasts in the floor of the otic vesicle and subsequently delaminate and migrate toward the hindbrain before completing differentiation. In all vertebrates, locally expressed Fgf initiates SAG development by inducing expression of Neurogenin1 (Ngn1) in the floor of the otic vesicle. However, not all Ngn1-positive cells undergo delamination, nor has the mechanism controlling SAG delamination been elucidated. Here we report that Goosecoid (Gsc), best known for regulating cellular dynamics in the Spemann organizer, regulates delamination of neuroblasts in the otic vesicle. In zebrafish, Fgf coregulates expression of Gsc and Ngn1 in partially overlapping domains, with delamination occurring primarily in the zone of overlap. Loss of Gsc severely inhibits delamination, whereas overexpression of Gsc greatly increases delamination. Comisexpression of Ngn1 and Gsc induces ectopic delamination of some cells from the medial wall of the otic vesicle but with a low incidence, suggesting the action of a local inhibitor. The medial marker Pax2a is required to restrict the domain of gsc expression, and misexpression of Pax2a is sufficient to block delamination and fully suppress the effects of Gsc The opposing activities of Gsc and Pax2a correlate with repression or up-regulation, respectively, of E-cadherin (cdh1). These data resolve a genetic mechanism controlling delamination of otic neuroblasts. The data also elucidate a developmental role for Gsc consistent with a general function in promoting epithelial-to-mesenchymal transition (EMT).