Sensory hair cells are exquisitely sensitive vertebrate mechanoreceptors that mediate the senses of hearing and balance. Understanding the factors that regulate the development of these cells is important, not only to increase our understanding of ear development and its functional physiology but also to shed light on how these cells may be replaced therapeutically. In this review, we describe the signals and molecular mechanisms that initiate hair cell development in vertebrates, with particular emphasis on the transcription factor Atoh1, which is both necessary and sufficient for hair cell development. We then discuss recent findings on how microRNAs may modulate the formation and maturation of hair cells. Last, we review recent work on how hair cells are regenerated in many vertebrate groups and the factors that conspire to prevent this regeneration in mammals.