Altered expression of peripheral myelin protein 22 (PMP22) results in demyelinating peripheral neuropathy. PMP22 exhibits a highly restricted tissue distribution with marked expression in the myelinating Schwann cells of peripheral nerves. Auditory and vestibular Schwann cells and the afferent neurons also express PMP22, suggesting a unique role in hearing and balancing. Indeed, neuropathic patients diagnosed with PMP22-linked hereditary neuropathies often present with auditory and balance deficits, an understudied clinical complication. To investigate the mechanism by which abnormal expression of PMP22 may cause auditory and vestibular deficits, we studied gene-targetedPMP22-null mice.PMP22-null mice exhibit an unsteady gait, have difficulty maintaining balance, and live for only ∼3–5 weeks relative to unaffected littermates. Histological analysis of the inner ear revealed reduced auditory and vestibular afferent nerve myelination and profound Na+channel redistribution without PMP22. Yet, Na+current density was unaltered, in stark contrast to increased K+current density. Atypical postsynaptic densities and a range of neuronal abnormalities in the organ of Corti were also identified. Analyses of auditory brainstem responses (ABRs) and vestibular sensory-evoked potential (VsEP) revealed thatPMP22-null mice had auditory and vestibular hypofunction. These results demonstrate that PMP22 is required for hearing and balance, and the protein is indispensable for the formation and maintenance of myelin in the peripheral arm of the eighth nerve. Our findings indicate that myelin abnormalities and altered signal propagation in the peripheral arm of the auditory nerve are likely causes of auditory deficits in patients with PMP22-linked neuropathies.