Developmental mechanisms provide insight into potential therapies for auditory regeneration. Gata3 is one of the earliest expressed transcription factors during auditory development and it is essential for the development of the auditory sensory epithelium. Haploinsufficiency in man manifests as hypoparathyroidism, sensorineural deafness and renal dysplasia (HDR) syndrome. In a heterozygous mouse model of this condition, hearing loss has an early onset that is apparently associated with functional defects in outer hair cells but the cause of hearing loss is unknown. Our aims were to identify the earliest electrophysiological deficits in hair cells to explain the observed hearing loss in HDR syndrome and to characterize the developmental function of Gata3 in the auditory sensory epithelium. We then proposed to identify factors that might upregulate Gata3 and restore hearing. Electrophysiological recordings of embryonic, neonatal and young adult outer hair cells showed that they differentiate normally in heterozygous mice, although some die at very early postnatal stages. However, inner hair cells suffer deficits in the function of the potassium conductances Ik;f and Ik;n at the onset of normal hearing. When Gata3 was knocked down selectively in inner hair cells from around embryonic day E16, similar deficits were observed. This is the first evidence that Gata3 has a cell autonomous function in the physiological differentiation of hair cells. Conditionally immortal, Gata3 reporter cell lines were then derived from otocysts of mice carrying the SV40 immortalising gene and a BAC construct with the Gata3 enhancer region linked to Egfp. The Gata3 reporter faithfully reproduces the expression pattern of endogenous Gata3 in the BAC transgenic mouse during normal inner ear development and it correlates with GATA3 protein in the reporter cell lines. These lines can thus be used for more detailed studies on how Gata3 regulates functional expression of potassium conductances in hair cells. More importantly, they can be used to screen for small molecules and drugs that might be able to upregulate Gata3 in vitro, which could potentially rescue the phenotype of HDR syndrome and provide an important therapeutic component for sensory regeneration.