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.