This paper presents Hierarchical Key Establishment Scheme (HIKES) for wireless sensor networks. In this scheme, the base station, acting as the central trust authority, empowers randomly selected sensors to act as local trust authorities authenticating on its behalf the cluster members and issuing all secret keys. HIKES uses a partial key escrow scheme that enables any sensor node selected as a cluster head to generate all the cryptographic keys needed to authenticate other sensors within its cluster. This scheme localizes authentication and key distribution, thereby reducing the communication cost with the base station. HIKES also provides one-step broadcast authentication mechanism and shows robustness against most known routing attacks. Simulation results show that HIKES provides an efficient and scalable solution to the key management problem.