Cells in our bodies with the most specialized functions are often the most vulnerable to death by disease, injury, or aging. Adding insult to injury, no natural mechanisms exist for spontaneous regeneration of these cells after damage or loss. In the mammalian auditory system this is especially true: when we lose any of the sensory hair cells of the inner ear cochlea from inherited disorders, noise, injury, or ototoxic drugs, we immediately or eventually lose some or all of our hearing. The cochlear implant (CI) is a technology conceptualized in the late 1950s to simulate the function of lost hair cells by delivering electrical representations of sound to surviving auditory nerve fibers. In patients with profound sensorineural hearing loss, however, very few of the individual spiral ganglion neurons (SGN) of the auditory nerve remain to relay information from the CI electrode to the brain, where perception occurs. Embryonic stem (ES) cells hold incredible potential for replacing SGN and improving CI availability if precise differentiation into a functional neuronal phenotype can be achieved. In this dissertation I will detail a novel approach to replace the SGN of the inner ear based on the hypothesis that recapitulation in ES cells of the spatial and temporal cues involved in SGN development will enhance differentiation into neurons with potential to function like endogenous nerve. Our in vitro and in vivo techniques expose ES cells to intrinsic and extrinsic factors normally present in the developing auditory nerve. Forced expression of the neuronal commitment gene Neurog1 accelerates SGN-like differentiation, while further application of neurotrophic factors appears to augment functional differentiation in vitro and may improve therapeutic integration of implanted cells into host tissue. Using these methods we found enhanced cellular differentiation of ES cells into a SGN-like phenotype on the morphological, neurochemical, and functional levels.