There is a well-established link between hyperbilirubinaemia and hearing loss in paediatrics, but the cellular mechanisms have not been elucidated. Here we used the Gunn rat model of hyperbilirubinaemia to investigate bilirubin-induced hearing loss. In vivo auditory brainstem responses revealed that Gunn rats have severe auditory deficits within 18 h of exposure to high bilirubin levels. Using an in vitro preparation of the auditory brainstem from these rats, extracellular multi-electrode array recording from the medial nucleus of the trapezoid body (MNTB) showed longer latency and decreased amplitude of evoked field potentials following bilirubin exposure, suggestive of transmission failure at this synaptic relay. Whole-cell patch-clamp recordings confirmed that the electrophysiological properties of the postsynaptic MNTB neurons were unaffected by bilirubin, with no change in action potential waveforms or current–voltage relationships. However, stimulation of the trapezoid body was unable to elicit large calyceal EPSCs in MNTB neurons of hyperbilirubinaemic rats, indicative of damage at a presynaptic site. Multi-photon imaging of anterograde-labelled calyceal projections revealed axonal staining and presynaptic profiles around MNTB principal neuron somata. Following induction of hyperbilirubinaemia the giant synapses were largely destroyed. Electron microscopy confirmed loss of presynaptic calyceal terminals and supported the electrophysiological evidence for healthy postsynaptic neurons. MNTB neurons express high levels of neuronal nitric oxide synthase (nNOS). Nitric oxide has been implicated in mechanisms of bilirubin toxicity elsewhere in the brain, and antagonism of nNOS by 7-nitroindazole protected hearing during bilirubin exposure. We conclude that bilirubin-induced deafness is caused by degeneration of excitatory synaptic terminals in the auditory brainstem.