Mutations in GPSM2 cause Chudley-McCullough syndrome (CMCS), an autosomal recessive neurological disorder characterized by early-onset sensorineural deafness and brain anomalies. Here, we show that mutation of the mouse orthologue of GPSM2 affects actin-rich stereocilia elongation in auditory and vestibular hair cells, causing deafness and balance defects. The G-protein subunit Gai3, a well-documented partner of Gpsm2, participates in the elongation process, and its absence also causes hearing deficits. We show that Gpsm2 defines an B200 nm nanodomain at the tips of stereocilia and this localization requires the presence of Gai3, myosin 15 and whirlin. Using single-molecule tracking, we report that loss of Gpsm2 leads to decreased outgrowth and a disruption of actin dynamics in neuronal growth cones. Our results elucidate the aetiology of CMCS and highlight a new molecular role for Gpsm2/Gai3 in the regulation of actin dynamics in epithelial and neuronal tissues.