The development of the labyrinth of Lampetra fluviatilis was investigated on three levels; the development of the gross morphology, the development of the hair cell orientation within the sensory areas, and the subcellular development of the sensory cells. The mode of development of the semicircular canals was found to differ from that found in gnathostomes. The hair cell orientation is derived from a sensory rudiment that has a complex orientation. The adult form is derived from this rudiment by its subdivision and spatial reorganization. The individual sensory cells are autonomous and apparently intrinsically polarized. This polarization occurs at an early stage and is reflected in the orientation of the centriole. In the first phase the sensory cells develop up to the ciliary bud stage. Further development does not take place until neuronal contact is established. This contact initiates the further development of the hair bundle but does not control its orientation. Functional neuronal contact appears to be made later.