The molecular mechanisms coordinating cell cycle exit with cell differentiation and organogenesis are a crucial, yet poorly understood, aspect of normal development. The mammalian cyclin-dependent kinase inhibitor p27(Kip1) is required for the correct timing of cell cycle exit in developing tissues, and thus plays a crucial role in this process. Although studies of p27(Kip1) regulation have revealed important posttranscriptional mechanisms regulating p27(Kip1) abundance, little is known about how developmental patterns of p27(Kip1) expression, and thus cell cycle exit, are achieved. Here, we show that during inner ear development transcriptional regulation of p27(Kip1) is the primary determinant of a wave of cell cycle exit that dictates the number of postmitotic progenitors destined to give rise to the hair cells and supporting cells of the organ of Corti. Interestingly, transcriptional induction from the p27(Kip1) gene occurs normally in p27(Kip1)-null mice, indicating that developmental regulation of p27(Kip1) transcription is independent of the timing of cell cycle exit. In addition, cell-type-specific patterns of p27(Kip1) transcriptional regulation are observed in the mature organ of Corti and retina, suggesting that this mechanism is important in differential regulation of the postmitotic state. This report establishes a link between the spatial and temporal pattern of p27(Kip1) transcription and the control of cell number during sensory organ morphogenesis.