The Hmx homeobox gene family appears to play a conserved role in CNS development in all animal species examined, and in higher vertebrates has an additional role in sensory organ development. Here, we show that murine Hmx2 and Hmx3 have both overlapping and distinct functions in the development of the inner ear's vestibular system, whereas their functions in the hypothalamic/pituitary axis of the CNS appear to be interchangeable. As in analogous knockin studies of Otx and En function, Drosophila Hmx can rescue conserved functions in the murine CNS. However, in contrast to Otx and En, Drosophila Hmx also rescues significant vertebrate-specific functions outside the CNS. Our work suggests that the evolution of the vertebrate inner ear may have involved (1) the redeployment of ancient Hmx activities to regulate the cell proliferation of structural components and (2) the acquisition of additional, vertebrate-specific Hmx activities to regulate the sensory epithelia.