The mammalian inner ear detects sound with the organ of Corti, an intricately patterned region of the cochlea in which one row of inner hair cells and three rows of outer hair cells are surrounded by specialized supporting cells. The organ of Corti derives from a prosensory domain that runs the length of the cochlear duct and is bounded by two nonsensory domains, Kölliker's organ on the neural side and the outer sulcus on the abneural side. Although much progress has been made in identifying the signals regulating organ of Corti induction and differentiation, less is known about the mechanisms that establish sensory and nonsensory territories in the cochlear duct. Here, we show that a gradient of bone morphogenetic protein (BMP) signaling is established in the abneural-neural axis of the cochlea. Analysis of compound mutants of Alk3/6 type I BMP receptors shows that BMP signaling is necessary for specification of the prosensory domain destined to form the organ of Corti. Reduction of BMP signaling in Alk3/6 compound mutants eliminates both the future outer sulcus and the prosensory domain, with all cells expressing markers of Kölliker's organ. BMP4 upregulates markers of the future outer sulcus and downregulates marker genes of Kölliker's organ in cochlear organ cultures in a dose-dependent manner. Our results suggest BMP signaling is required for patterning sensory and nonsensory tissue in the mammalian cochlea.