Early regionalized gene expression patterns within the otocyst appear to correlate with and contribute to development of mature otic structures. In the chick, the transcription factor Pax2 becomes restricted to the dorsal and entire medial side of the otocyst by stage 16/17. The dorsal region of the otocyst forms the endolymphatic duct and sac (ED/ES), and the cochlear duct is derived from the ventromedial region. In the mouse, however, Pax2 expression is reported only in the ventromedial and not the dorsal otocyst. In Pax2 null mice, the cochlea is missing or truncated, but vestibular structures differentiate normally. Here we demonstrate that in the chick, the emerging ED/ES express high levels of Pax2 even when the position of the emerging ED is altered with respect to its environment, either by 180° otocyst rotations about the anterior/posterior axis or transplantation of the otocyst into the hindbrain cavity. However, the Pax2 expression pattern is plastic in the rest of the otic epithelium after 180° rotation of the otocyst. Pax2 is upregulated on the medial side (formerly lateral), and downregulated on the lateral side (formerly medial and expressing Pax2) indicating that Pax2 expression is influenced by the environment. Although Pax2 is upregulated in the epithelium after 180° rotations in the region that should form the cochlear duct, cochlear ducts are truncated or absent, and the ED/ES emerge in a new ventrolateral position. Ablation of the hindbrain at the placode or early otic pit stage alters the timing of regionalized Pax2 expression in the otocyst. The resulting otocysts and ears are generally smaller, vestibular structures are abnormal, ED/ES are missing but cochlear ducts are of normal length. The hindbrain and dorsal periotic mesenchyme provide unique trophic and patterning information to the dorsal otocyst. Our results demonstrate that the ED is the earliest structure patterned in the inner ear and that the hindbrain is important for its specification. We also show that, although normal Pax2 expression is required for cochlear duct development, it is downstream of ventral otocyst patterning events.