Two morphological classes of mechanosensory cells have been described in the vestibular organs of mammals, birds, and reptiles type I and type II hair cells. Type II hair cells resemble hair cells in other organs in that they receive bouton terminals from primary afferent neurons. In contrast, type I hair cells are enveloped by large cuplike afferent terminals called calyces. Type I and II cells differ in other morphological respects cell shape, hair bundle properties, and more subtle ultrastructural features. Understanding the functional significance of these strikingly different morphological features has proved to be a challenge. Experiments that correlated the response properties of primary vestibular afferents with the morphologies of their afferent terminals suggested that the synapse between the type I hair cell and calyx ending is lower gain than that between a type II hair cell and a bouton ending. Recently, patch-clamp experiments on isolated hair cells have revealed that type I hair cells from diverse species have a large potassium conductance that is activated at the resting potential. As a consequence, the voltage responses generated by the type I hair cells in response to injected currents are smaller than those generated by type II hair cells. This may contribute to the lower gain of type I inputs to primary afferent neurons. Studies of neonatal mouse utricles show that the type I-specific potassium conductance is not present at birth but emerges during the first postnatal week, a period of morphological differentiation of type I and type II hair cells.