The Foxi3 transcription factor, expressed in the neural plate border at the end of gastrulation, is necessary for the formation of posterior placodes and is thus important for ectodermal patterning. We have created two knock-in mouse lines expressing GFP or a tamoxifen-inducible Cre recombinase to show that Foxi3 is one of the earliest genes to label the border between the neural tube and epidermis, and that Foxi3-expressing neural plate border progenitors contribute primarily to cranial placodes and epidermis from the onset of expression, but not to the neural crest or neural tube lineages. By simultaneously knocking out Foxi3 in neural plate border cells and following their fates, we show that neural plate border cells lacking Foxi3 contribute to all four lineages of the ectoderm – placodes, epidermis, crest and neural tube. We contrast Foxi3 with another neural plate border transcription factor, Zic5, the progenitors of which initially contribute broadly to all germ layers until gastrulation and gradually become restricted to the neural crest lineage and dorsal neural tube cells. Our study demonstrates that Foxi3 uniquely acts early at the neural plate border to restrict progenitors to a placodal and epidermal fate.