Echolocation in bats and high-frequency hearing in their insect prey make bats and insects an ideal system for studying the sensory ecology and neuroethology of predator-prey interactions. Here, we review the evolutionary history of bats and eared insects, focusing on the insect order Lepidoptera, and consider the evidence for antipredator adaptations and predator counter-adaptations. Ears evolved in a remarkable number of body locations across insects, with the original selection pressure for ears differing between groups. Although cause and effect are difficult to determine, correlations between hearing and life history strategies in moths provide evidence for how these two variables influence each other. We consider life history variables such as size, sex, circadian and seasonal activity patterns, geographic range and the composition of sympatric bat communities. We also review hypotheses on the neural basis for antipredator behaviours (such as evasive flight and sound production) in moths. It is assumed that these prey adaptations would select for counter-adaptations in predatory bats. We suggest two levels of support for classifying bat traits as counter-adaptations: traits that allow bats to eat more eared prey than expected based on their availability in the environment provide a low level of support for counter-adaptations, whereas traits that have no other plausible explanation for their origination and maintenance than capturing defended prey constitute a high level of support. Specific predator counter-adaptations include calling at frequencies outside the sensitivity range of most eared prey, changing the pattern and frequency of echolocation calls during prey pursuit, and quiet, or 'stealth', echolocation.