Normal hearing requires exquisite cooperation between bony and sensorineural structures within the cochlea. For example, the inner ear secretes proteins such as osteoprotegrin (OPG) that can prevent cochlear bone remodeling. Accordingly, diseases that affect bone regulation can also result in hearing loss. Patients with fibrous dysplasia develop trabecular bone overgrowth resulting in hearing loss if the lesions affect the temporal bones. Unfortunately, the mechanisms responsible for this hearing loss, which could be sensorineural and/or conductive, remain unclear. In this study, we used a unique transgenic mouse model of increased Gs G-protein coupled receptor (GPCR) signaling induced by expression of an engineered receptor, Rs1, in osteoblastic cells. These ColI(2.3)+/Rs1+ mice showed dramatic bone lesions that histologically and radiologically resembled fibrous dysplasia. We found that ColI(2.3)+/Rs1+ mice showed progressive and severe conductive hearing loss. Ossicular chain impingement increased with the size and number of dysplastic lesions. While sensorineural structures were unaffected, ColI(2.3)+/Rs1+ cochleae had abnormally high osteoclast activity, together with elevated tartrate resistant acid phosphatase (TRAP) activity and receptor activator of nuclear factor kappa-B ligand (Rankl) mRNA expression. ColI(2.3)+/Rs1+ cochleae also showed decreased expression of Sclerostin (Sost), an antagonist of the Wnt signaling pathway that normally increases bone formation. The osteocyte canalicular networks of ColI(2.3)+/Rs1+ cochleae were disrupted and showed abnormal osteocyte morphology. The osteocytes in the ColI(2.3)+/Rs1+ cochleae showed increased expression of matrix metalloproteinase 13 (MMP-13) and TRAP, both of which can support osteocyte-mediated peri-lacunar remodeling. Thus, while the ossicular chain impingement is sufficient to account for the progressive hearing loss in fibrous dysplasia, the deregulation of bone remodeling extends to the cochlea as well. Our findings suggest that factors regulating bone remodeling, including peri-lacunar remodeling by osteocytes, may be useful targets for treating the bony overgrowths and hearing changes of fibrous dysplasia and other bony pathologies.