The mouse organ of Corti, housed inside the cochlea, contains hair cells and supporting cells that transduce sound into electrical signals. These cells develop in two main steps: progenitor specification followed by differentiation. Fibroblast Growth Factor (FGF) signaling is important in this developmental pathway, as deletion of FGF receptor 1 (Fgfr1) or its ligand, Fgf20, leads to the loss of hair cells and supporting cells from the organ of Corti. However, whether FGF20-FGFR1 signaling is required during specification or differentiation, and how it interacts with the transcription factor Sox2, also important for hair cell and supporting cell development, has been a topic of debate. Here, we show that while FGF20-FGFR1 signaling functions during progenitor differentiation, FGFR1 has an FGF20-independent, Sox2-dependent role in specification. We also show that a combination of reduction in Sox2 expression and Fgf20 deletion recapitulates the Fgfr1-deletion phenotype. Furthermore, we uncovered a strong genetic interaction between Sox2 and Fgf20, especially in regulating the development of hair cells and supporting cells towards the basal end and the outer compartment of the cochlea. To explain this genetic interaction and its effects on the basal end of the cochlea, we provide evidence that decreased Sox2 expression delays specification, which begins at the apex of the cochlea and progresses towards the base, while Fgf20-deletion results in premature onset of differentiation, which begins near the base of the cochlea and progresses towards the apex. Thereby, Sox2 and Fgf20 interact to ensure that specification occurs before differentiation towards the cochlear base. These findings reveal an intricate developmental program regulating organ of Corti development along the basal-apical axis of the cochlea.