Following the positional cloning of PDS, the gene mutated in the deafness/goitre disorder Pendred syndrome (PS), numerous studies have focused on defining the role of PDS in deafness and PS as well as elucidating the function of the PDS-encoded protein (pendrin). To facilitate these efforts and to provide a system for more detailed study of the inner-ear defects that occur in the absence of pendrin, we have generated a Pds-knockout mouse. Pds^–/– mice are completely deaf and also display signs of vestibular dysfunction. The inner ears of these mice appear to develop normally until embryonic day 15, after which time severe endolymphatic dilatation occurs, reminiscent of that seen radiologically in deaf individuals with PDS mutations. Additionally, in the second postnatal week, severe degeneration of sensory cells and malformation of otoconia and otoconial membranes occur, as revealed by scanning electron and fluorescence confocal microscopy. The ultrastructural defects seen in the Pds^–/– mice provide important clues about the mechanisms responsible for the inner-ear pathology associated with PDS mutations.