We review the molecular basis of auditory development and evolution. We propose that the auditory periphery (basilar papilla, organ of Corti) evolved by transforming a newly created and redundant vestibular (gravistatic) endorgan into a sensory epithelium that could respond to sound instead of gravity. Evolution altered this new epithelia's mechanoreceptive properties through changes of hair cells, positioned the epithelium in a unique position near perilymphatic space to extract sound moving between the round and the oval window, and transformed its otolith covering into a tympanic membrane. Another important step in the evolution of an auditory system was the evolution of a unique set of "auditory neurons" that apparently evolved from vestibular neurons. Evolution of mammalian auditory (spiral ganglion) neurons coincides with GATA3 being a transcription factor found selectively in the auditory afferents. For the auditory information to be processed, the CNS required a dedicated center for auditory processing, the auditory nuclei. It is not known whether the auditory nucleus is ontogenetically related to the vestibular or electroreceptive nuclei, two sensory systems found in aquatic but not in amniotic vertebrates, or a de-novo formation of the rhombic lip in line with other novel hindbrain structures such as pontine nuclei. Like other novel hindbrain structures, the auditory nuclei express exclusively the bHLH gene Atoh1, and loss of Atoh1 results in loss of most of this nucleus in mice. Only after the basilar papilla, organ of Corti evolved could efferent neurons begin to modulate their activity. These auditory efferents most likely evolved from vestibular efferent neurons already present. The most simplistic interpretation of available data suggest that the ear, sensory neurons, auditory nucleus, and efferent neurons have been transformed by altering the developmental genetic modules necessary for their development into a novel direction conducive for sound extraction, conduction, and processing.