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<i>Barhl1</i>, a mouse homologous gene of Drosophila BarH class homeobox genes, is highly expressed within the inner ear and crucial for the long-term maintenance of auditory hair cells that mediate hearing and balance, yet little is known about the molecular events underlying <i>Barhl1</i> regulation and function in hair cells. In this study, through data mining and in vitro report assay, we firstly identified <i>Barhl1</i> as a direct target gene of Atoh1 and one E-box (E3) in <i>Barhl1</i> 3&#8217; enhancer is crucial for Atoh1-mediated <i>Barhl1</i> activation. Then we generated a mouse embryonic stem cell (mESC) line carrying disruptions on this E3 site E-box (CAGCTG) using CRISPR/Cas9 technology and this E3 mutated mESC line is further subjected to an efficient stepwise hair cell differentiation strategy <i>in vitro</i>. Disruptions on this E3 site caused dramatic loss of <i>Barhl1</i> expression and significantly reduced the number of induced hair cell-like cells, while no affections on the differentiation toward early primitive ectoderm-like cells and otic progenitors. Finally, through RNA-seq profiling and gene ontology (GO) enrichment analysis, we found that this E3 box was indispensable for <i>Barhl1</i> expression to maintain hair cell development and normal functions. We also compared the transcriptional profiles of induced cells from CDS mutated and E3 mutated mESCs, respectively, and got very consistent results except the <i>Barhl1</i> transcript itself. These observations indicated that Atoh1-mediated <i>Barhl1</i> expression could have important roles during auditory hair cell development. In brief, our findings delineate the detail molecular mechanism of <i>Barhl1</i> expression regulation in auditory hair cell differentiation.