Immunolocalization studies of mouse cochlea and vestibular end-organ were performed to study the expression pattern of pendrin, the protein encoded by the Pendred syndrome gene (PDS), in the inner ear. The protein was restricted to the areas composed of specialized epithelial cells thought to play a key role in regulating the composition and resorption of endolymph. In the cochlea, pendrin was abundant in the apical membrane of cells in the spiral prominence and outer sulcus cells (along with their root processes). In the vestibular end-organ, pendrin was found in the transitional cells of the cristae ampullaris, utriculi, and sacculi as well as in the apical membrane of cells in the endolymphatic sac. Pds-knockout (Pds-/-) mice were found to lack pendrin immunoreactivity in all of these locations. Histological studies revealed that the stria vascularis in Pds-/- mice was only two-thirds the thickness seen in wild-type mice, with the strial marginal cells showing irregular shapes and sizes. Functional studies were also performed to examine the role of pendrin in endolymph homeostasis. Using double-barreled electrodes placed in both the cochlea and the utricle, the endocochlear potential and endolymph potassium concentration were measured in wild-type and Pds-/- mice. Consistent with the altered strial morphology, the endocochlear potential in Pds-/- mice was near zero and did not change during anoxia. On the other hand, the endolymphatic potassium concentration in Pds-/- mice was near normal in the cochlea and utricle. Together, these results suggest that pendrin serves a key role in the functioning of the basal and/or intermediate cells of the stria vascularis to maintain the endocochlear potential, but not in the potassium secretory function of the marginal cells.