The mammalian middle ear comprises a chain of ossicles, the malleus, incus, and stapes that act as an impedance matching device during the transmission of sound from the tympanic membrane to the inner ear. These ossicles are derived from cranial neural crest cells that undergo endochondral ossification and subsequently differentiate into their final functional forms. Defects that occur during middle ear development can result in conductive hearing loss. In this review, we summarize studies describing the crucial roles played by signaling molecules such as sonic hedgehog, bone morphogenetic proteins, fibroblast growth factors, notch ligands, and chemokines during the differentiation of neural crest into the middle ear ossicles. In addition to these cell-extrinsic signals, we also discuss studies on the function of transcription factor genes such as Foxi3, Tbx1, Bapx1, Pou3f4, and Gsc in regulating the development and morphology of the middle ear ossicles.