Otosclerosis is a bone disorder of the otic capsule and common form of late-onset hearing impairment. Considered a complex disease, little is known about its pathogenesis. Over the past 20 years, ten autosomal dominant loci (OTSC1-10) have been mapped but no genes identified. Herein, we map a new OTSC locus to a 9.96 Mb region within the FOX gene cluster on 16q24.1 and identify a 15 bp coding deletion in Forkhead Box L1 co-segregating with otosclerosis in a Caucasian family. Pre-operative phenotype ranges from moderate to severe hearing loss to profound sensorineural loss requiring a cochlear implant. Mutant FOXL1 is both transcribed and translated and correctly locates to the cell nucleus. However, the deletion of 5 residues in the C-terminus of mutant FOXL1 causes a complete loss of transcriptional activity due to loss of secondary (alpha helix) structure. FOXL1 (rs764026385) was identified in a second unrelated case on a shared background. We conclude that FOXL1 (rs764026385) is pathogenic and causes autosomal dominant otosclerosis and propose a key inhibitory role for wildtype Foxl1 in bone remodelling in the otic capsule. New insights into the molecular pathology of otosclerosis from this study provide molecular targets for non-invasive therapeutic interventions.