The mammalian middle ear cavity contains a chain of three ossicles (the malleus, incus, and stapes), which develop from the mesenchyme of the first two branchial arches. Mice deficient in the Msx1 homeobox gene exhibit craniofacial abnormalities, including the absence of the malleal processus brevis that is normally attached to the upper part of the tympanic membrane. Here, we show that the expression of Msx1 and Msx2 overlaps in the malleal primordium during early embryonic development. A functional redundancy of Msx1 and Msx2 in the development of the middle ear is suggested by the stronger hypomorphism in the malleus of Msx1(-/-)/Msx2(-/-) embryos, including the absence of the malleal manubrium and the malleal processus brevis. The expression of Bmp4, a known downstream target of Msx1 in several developing craniofacial organs, was down-regulated in the malleal primordium, particularly in the region of the developing malleal manubrium, of Msx1 and Msx1(-/-)/Msx2(-/-) embryos. Msx genes, thus, appear to act in a cell autonomous manner, possibly by regulating Bmp4 expression, in the formation of the malleus. Transgenic rescue of the cleft palate of Msx1(-/-) mice overcame the neonatal lethality and allowed Msx1(-/-) mice to grow into adulthood but retain the phenotype of the absence of the malleal processus brevis. The availability of this animal model for the first time allowed us to measure auditory evoked potentials to assess the functional significance of the malleal processus brevis. The results demonstrated unimpaired auditory function in Msx1(-/-) mice. In addition, mutant mice appeared normal in balance behavior and in the vestibular evoked potential screening test. These results indicate that the malleal processus brevis is not necessary for sound transmission and seems dispensable for normal hearing and balance in mammals.