Inner ear sensory hair cells (HCs), supporting cells (SCs), and sensory neurons (SNs) are hypothesized to develop from common progenitors in the early embryonic otocyst. Because little is known about the molecular signals that control this lineage specification, we derived a model system of early otic development: conditionally immortalized otocyst (IMO) cell lines from the embryonic day 9.5 Immortomouse. This age is the earliest stage at which the otocyst can easily be separated from surrounding mesenchymal, nervous system, and epithelial cells. At 9.5 days post coitum, there are still pluripotent cells in the otocyst, allowing for the eventual identification of both SN and HC precursors—and possibly an elusive inner ear stem cell. Cell lines derived from primitive precursor cells can also be used as blank canvases for transfections of genes that can affect lineage decisions as the cells differentiate. It is important, therefore, to characterize the “baseline state” of these cell lines in as much detail as possible. We characterized seven representative “precursor-like” IMO cell populations and the uncloned IMO cells, before cell sorting, at the molecular level by polymerase chain reaction (PCR) and immunocytochemistry (IHC), and one line (IMO-2B1) in detail by real-time quantitative PCR and IHC. Many of the phenotypic markers characteristic of differentiated HCs or SCs were detected in IMO-2B1 proliferating cells, as well as during differentiation for up to 30 days in culture. These IMO cell lines represent a unique model system for studying early stages of inner ear development and determining the consequences of affecting key molecular events in their differentiation. Developmental Dynamics 231:815–827, 2004. © 2004 Wiley-Liss, Inc.