Drosophila olfactory receptor neurons (ORNs) elaborate a precise internal representation of the external olfactory world in the antennal lobe (AL), a structure analagous to the vertebrate olfactory bulb. ORNs expressing the same odorant receptor innervate common targets in a highly organized neuropilar structure inside the AL, the glomerulus. During normal development, ORNs target to specific regions of the AL and segregate into subclass-specific aggregates called protoglomeruli prior to extensive intermingling with target dendrites to form mature glomeruli. Using a panel of ORN subclass-specific markers, we demonstrate that in the adult AL, N-cadherin (N-cad) mutant ORN terminals remain segregated from dendrites of target neurons. N-cad plays a crucial role in protoglomerulus formation but is largely dispensible for targeting to the appropriate region of the AL. We propose that N-cad, a homophilic cell adhesion molecule, acts in a permissive fashion to promote subclass-specific sorting of ORN axon terminals into protoglomeruli.