Regulation of organogenesis involves a dynamic balance of the mechanisms regulating cell division, differentiation and death. Here we have investigated the pattern of expression of c-Raf kinase in the inner ear during early developmental stages and the consequences of manipulating c-Raf levels by misexpression of c-raf viral vectors in organotypic cultures of otic vesicle explants. We found that otic vesicles expressed c-Raf and its level remained constant during embryonic days 2 and 3 (E2-E3). c-Raf activity was increased in response to insulin like growth factor-I (IGF-I) and the activation by IGF-I of the c-Raf kinase pathway was a requirement to turn on cell proliferation in the otic vesicle. Overexpression of c-raf in E2.5 explants increased the proliferative response to low serum and IGF-I and blocked differentiation induced by retinoic acid. The increase in c-Raf levels also prevented nerve growth factor (NGF)-dependent induction of programmed cell death. Consistent with these results, the expression of a dominant negative c-Raf mutant potentiated retinoic acid action and decreased the rate of cell proliferation. We conclude that a strict control of c-Raf levels is essential for the co-ordination of the biological processes that operate simultaneously during early inner ear development.