We investigated whether co‐expression of Neurog1 and Atoh1 in common neurosensory precursors could explain the loss of hair cells in Neurog1 null mice. Analysis of terminal mitosis, using BrdU, supports previous findings regarding timing of exit from cell cycle. Specifically, we show that cell cycle exit occurs in spiral sensory neurons in a base‐to‐apex progression followed by cell cycle exit of hair cells in the organ of Corti in an apex‐to‐base progression, with some overlap of cell cycle exit in the apex for both hair cells and spiral sensory neurons. Hair cells in Neurog1 null mice show cell cycle exit in an apex‐to‐base progression about 1–2 days earlier. Atoh1 is expressed in an apex‐to‐base progression rather then a base‐to‐apex progression as in wildtype littermates. We tested the possible expression of Atoh1 in neurosensory precursors using two Atoh1‐Cre lines. We show Atoh1‐Cre mediated β‐galactosidase expression in delaminating sensory neuron precursors as well as undifferentiated epithelial cells at E11 and E12.5. PCR analysis shows expression of Atoh1 in the otocyst as early as E10.5, prior to any histology‐based detection techniques. Combined, these data suggest that low levels of Atoh1 exist much earlier in precursors of hair cells and sensory neurons, possibly including neurosensory precursors. Analysis of Atoh1‐Cre expression in E18.5 embryos and P31 mice reveal β‐galactosidase stain in all hair cells but also in vestibular and cochlear sensory neurons and some supporting cells. A similar expression of Atoh1‐LacZ exists in postnatal and adult vestibular and cochlear sensory neurons, and Atoh1 expression in vestibular sensory neurons is confirmed with RT‐PCR. We propose that the absence of NEUROG1 protein leads to loss of sensory neuron formation through a phenotypic switch of cycling neurosensory precursors from sensory neuron to hair cell fate. Neurog1 null mice show a truncation of clonal expansion of hair cell precursors through temporally altered terminal mitosis, thereby resulting in smaller sensory epithelia. Developmental Dynamics 234:633–650, 2005. © 2005 Wiley‐Liss, Inc.