Fibroblast growth factor receptor 3 (FGFR3) is a key regulator of skeletal development and activating mutations in FGFR3 cause skeletal dysplasias, including hypochondroplasia, achondroplasia and thanatophoric dysplasia. The introduction of the Y367C mutation corresponding to the human Y373C thanatophoric dysplasia type I (TDI) mutation into the mouse genome, resulted in dwarfism with a skeletal phenotype remarkably similar to that of human chondrodysplasia. To investigate the role of the activating Fgfr3 Y367C mutation in auditory function, the middle and inner ear of the heterozygous mutant Fgfr3^Y367C/+ mice were examined. The mutant Fgfr3^Y367C/+ mice exhibit fully penetrant deafness with a significantly elevated auditory brainstem response threshold for all frequencies tested. The inner ear defect is mainly associated with an increased number of pillar cells or modified supporting cells in the organ of Corti. Hearing loss in the Fgfr3^Y367C/+ mouse model demonstrates the crucial role of Fgfr3 in the development of the inner ear and provides novel insight on the biological consequences of FGFR3 mutations in chondrodysplasia.