Few families of signaling factors have been implicated in the control of development. Here, we identify the neuropeptides nociceptin and somatostatin, a neurotransmitter and neuroendocrine hormone, as a class of developmental signals in both chick and zebrafish. We show that signals from the anterior mesendoderm are required for the formation of anterior placode progenitors, with one of the signals being somatostatin. Somatostatin controls ectodermal expression of nociceptin, and both peptides regulate Pax6 in lens and olfactory progenitors. Consequently, loss of somatostatin and nociceptin signaling leads to severe reduction of lens formation. Our findings not only uncover these neuropeptides as developmental signals but also identify a long-sought-after mechanism that initiates Pax6 in placode progenitors and may explain the ancient evolutionary origin of neuropeptides, predating a complex nervous system.