Congenital CMV infection is the major non-genetic cause of sensorineural hearing loss at birth and beyond. Among other pathologies, there is a striking dysplasia/hyperplasia of organ of Corti hair and supporting cells (HC/SC). Using an in vitro embryonic mouse model of CMV-induced cochlear teratogenesis that mimics the known human pathology, and functional signaling network modeling, we tested the hypothesis that CMV disrupts the highly ordered HC/SC pattern by dysregulating Notch and Fgfr3, their cognate ligands and downstream effectors. Several novel emergent properties of the critical lateral inhibition subnetwork became apparent. The subnetwork has classic small-world properties such as short paths between most gene pairs, few long-distance links, and considerable clustering. Concomitantly, the calculated probability that our specific gene expression dataset is from dysplastic organs of Corti is highly significant (p < 1 × 10−12). Further, we determined that the subnetwork has a highly heterogeneous scale-free topology in which the highly linked genes (hubs), Notch and Fgfr3, play a central role in mediating interactions among the less linked genes. This phenomenon has important biologic and therapeutic implications.