The cochlea of the mammalian inner ear contains an endolymph that exhibits an endocochlear potential (EP) of +80 mV with a [K+] of 150 mM. This unusual extracellular solution is maintained by the cochlear lateral wall, a double-layered epithelial-like tissue. Acoustic stimuli allow endolymphatic K+ to enter sensory hair cells and excite them. The positive EP accelerates this K+ influx, thereby sensitizing hearing. K+ exits from hair cells and circulates back to the lateral wall, which unidirectionally transports K+ to the endolymph. In vivo electrophysiological assays demonstrated that the EP stems primarily from two K+ diffusion potentials yielded by [K+] gradients between intracellular and extracellular compartments in the lateral wall. Such gradients seem to be controlled by ion channels and transporters expressed in particular membrane domains of the two layers. Analyses of human deafness genes and genetically modified mice suggested the contribution of these channels and transporters to EP and hearing. A computational model, which reconstitutes unidirectional K+ transport by incorporating channels and transporters in the lateral wall and connects this transport to hair cell transcellular K+ fluxes, simulates the circulation current flowing between the endolymph and the perilymph. In this model, modulation of the circulation current profile accounts for the processes leading to EP loss under pathological conditions. This article not only summarizes the unique physiological and molecular mechanisms underlying homeostasis of the EP and their pathological relevance but also describes the interplay between EP and circulation current.