Chicken Ovalbumin Upstream Promoter-Transcription Factor II (COUP-TFII) plays pivotal roles in cell growth, cell differentiation, and cell fate determination. Although genome-wide studies have identified COUP-TFII binding on gene sets mainly involved in neural crest cell (NCC) development and craniofacial morphogenesis, the direct functional connection between COUP-TFII and NCCs in vivo has not been well characterized. In this study, we show that COUP-TFII is expressed in the subpopulation of NCCs and its derivatives, and targeted ablation of COUP-TFII in mouse NCCs results in markedly shortened and bifurcated tympanic rings, which in turn disturb the caudal direction of external acoustic meatus invagination. However, formation of the manubrium of the malleus (MM) in Wnt1-Cre/+;COUP-TFII flox/flox mice is not perturbed, suggesting that the rostral half of the tympanic ring is sufficient to support proper MM development. Interestingly, we found that loss of COUP-TFII up-regulates Sox9 in the tympanic ring primordium and affects the distribution of preosteoblasts before mesenchymal condensation. Together, our results demonstrate that COUP-TFII plays an essential role in regulating the patterning of the NCC-derived tympanic ring.