The vertebrate inner ear is derived from the otic placode and undergoes a complicated series of morphogenetic processes to differentiate into an elaborate structure harboring mechanosensory epithelia featuring hair cells, the mechanoreceptors of hearing and balance. Recently, the principal mechanisms producing hair cells and the key molecules involved in their fate determination and differentiation have been gradually unveiled. The in-depth understanding of hair cell development is consequently providing clues to strategies for mammalian hair cell regeneration. Among them, the identification and characterization of progenitor cells for the hair cell lineage, which is just emerging, is of particular interest. Herein, we review the molecular mechanisms of inner ear development with particular focus on perspectives for hair cell regeneration.