SUMMARYMechanosensory hair cells and supporting cells develop from common precursors located in the prosensory domain of the developing cochlear epithelium. Prosensory cell differentiation into hair cells or supporting cells proceeds from the basal to the apical region of the cochleae, but the mechanism and significance of this basal-to-apical wave of differentiation remain to be elucidated. Here, we investigated the role of Hedgehog (Hh) signaling in cochlear development by examining the effects of up-and downregulation of Hh signaling in vivo. The Hh effector smoothened (Smo) was genetically activated or inactivated specifically in the developing cochlear epithelium after prosensory domain formation. Cochleae expressing a constitutively active allele of Smo showed only one row of inner hair cells with no outer hair cells (OHCs); abnormal undifferentiated prosensory-like cells were present in the lateral compartment instead of OHCs and their adjacent supporting cells. This suggests that Hh signaling inhibits prosensory cell differentiation into hair cells or supporting cells and maintains their properties as prosensory cells. Conversely, in cochlea with the Smo conditional knockout (Smo CKO), hair cell differentiation was preferentially accelerated in the apical region. Smo CKO mice survived after birth, and exhibited hair cell disarrangement in the apical region, a decrease in hair cell number, and hearing impairment. These results indicate that Hh signaling delays hair cell and supporting cell differentiation in the apical region, which forms the basal-to-apical wave of development, and is required for the proper differentiation, arrangement and survival of hair cells and for hearing ability.