The induction of sensory organ placodes, in particular the lens placode, represents the paradigm for induction. We show that medaka Sox3 is expressed in the neuroectoderm and in the placodes of all sensory organs prior to placode formation and subsequently in placode-derived tissues. Ectopic Sox3 expression leads to ectopic expression of Pax6 and Eya1 in embryonic ectoderm and causes ectopic lens and otic vesicle formation. The descendants of cells ectopically expressing Sox3-mRNA contribute to ectopic lens tissue. This suggests a permissive role for Sox3 in establishing a placodal competence. In addition, ectopic Sox3 expression leads to the dysgenesis of the endogenous sensory organs. Both effects of ectopic Sox3 expression can be separated by ectopic expression of a truncated Sox3 variant depending on its expression level. Our data suggests that Sox3 is a permissive factor for sensory placode formation and plays an important role in sensory organ development.