Inner ear sensory epithelia contain mechanosensitive hair cells that transmit information to the brain through innervation with bipolar neurons. Mammalian hair cells do not regenerate and are limited in number. Here we investigate the potential to generate mechanosensitive hair cells from mouse embryonic stem cells in a three-dimensional (3D) culture system. The system faithfully recapitulates mouse inner ear induction followed by self-guided development into organoids that morphologically resemble inner ear vestibular organs. We find that organoid hair cells acquire mechanosensitivity equivalent to functionally mature hair cells in postnatal mice. The organoid hair cells also progress through a similar dynamic developmental pattern of ion channel expression, reminiscent of two subtypes of native vestibular hair cells. We conclude that our 3D culture system can generate large numbers of fully functional sensory cells which could be used to investigate mechanisms of inner ear development and disease as well as regenerative mechanisms for inner ear repair