The vertebrate inner ear is a sensory organ responsible for auditory and vestibular function. Since its complex structure and cell types arise from a simply structured group of ectodermal cells, called the otic placode, the development of the inner ear has been a popular subject in embryology and developmental biology for decades. To date, many regulatory molecules and their functions have been identified in inner ear development showing considerable conservation among vertebrates. In vertebrates, Fgfs (fibroblast growth factors) from surrounding tissues are the main otic inducer and regulate various otic genes’ expression. Under the control of Fgf signals, pax2/5/8 genes are expressed in the otic region in the critical stages of otic development suggesting their function in otic development. In order to understand the function of pax2/5/8 genes and their interactions in the developing ear, we utilize zebrafish as a model system. Among zebrafish pax2/5/8 genes, pax8 is the earliest gene expressed in the preotic region while pax2a and pax2b are expressed slightly later. We found that pax8 is initially required for normal otic induction. Subsequently, pax8, pax2a and pax2b function redundantly to maintain otic fate. After otic placodes are induced by an Fgf signaling network, expression of Fgf3, one of otic inducers in zebrafish, persists in the hindbrain rhombomere 4. To investigate the function of the persistant Fgf3 expression, we examined a mutant with expanded Fgf3 expression in the hindbrain. Together with fgf3 knockdown results, we discovered that Fgf3 has later roles in specifying the anteroposterior (A-P) axis in the otic vesicle and regulating hair cell formation. We further identified pax5 as one of the genes regulated by the hindbrain Fgf3 activity, and pax5 function to be required for utricular hair cell survival.