Inner ear morphogenesis requires tightly regulated epigenetic and transcriptional control of gene expression. CHD7, an ATP-dependent chromodomain helicase DNA-binding protein, and SOX2, an SRY-related HMG box pioneer transcription factor, are known to contribute to vestibular and auditory system development, but their genetic interactions in the ear have not been explored. Here, we analyzed inner ear development and the transcriptional regulatory landscapes in mice with variable dosages of Chd7 and/or Sox2. We show that combined haploinsufficiency for Chd7 and Sox2 results in reduced otic cell proliferation, severe malformations of semicircular canals, and shortened cochleae with ectopic hair cells. Examination of mice with conditional, inducible Chd7 loss by Sox2CreER reveals a critical period (~E9.5) of susceptibility in the inner ear to combined Chd7 and Sox2 loss. Data from genome-wide RNA-sequencing and CUT&Tag studies in the otocyst show that CHD7 regulates Sox2 expression and acts early in a gene regulatory network to control expression of key otic patterning genes, including Pax2 and Otx2. CHD7 and SOX2 directly bind independently and cooperatively at transcription start sites and enhancers to regulate otic progenitor cell gene expression. Together, our findings reveal essential roles for Chd7 and Sox2 in early inner ear development and may be applicable for syndromic and other forms of hearing or balance disorders.