Sensory hair cells in the mammalian cochlea convert mechanical stimuli into electrical impulses that subserve audition. Loss of hair cells and their innervating neurons is the most frequent cause of hearing impairment. Atonal homologue 1 (encoded by Atoh1, also known as Math1) is a basic helix-loop-helix transcription factor required for hair-cell development, and its misexpression in vitro and in vivo generates hair-cell-like cells. Atoh1-based gene therapy to ameliorate auditory and vestibular dysfunction has been proposed. However, the biophysical properties of putative hair cells induced by Atoh1 misexpression have not been characterized. Here we show that in utero gene transfer of Atoh1 produces functional supernumerary hair cells in the mouse cochlea. The induced hair cells display stereociliary bundles, attract neuronal processes and express the ribbon synapse marker carboxy-terminal binding protein 2 (refs 12,13). Moreover, the hair cells are capable of mechanoelectrical transduction and show basolateral conductances with age-appropriate specializations. Our results demonstrate that manipulation of cell fate by transcription factor misexpression produces functional sensory cells in the postnatal mammalian cochlea. We expect that our in utero gene transfer paradigm will enable the design and validation of gene therapies to ameliorate hearing loss in mouse models of human deafness.