The core mechanism of circadian timekeeping in arthropods and vertebrates consists of feedback loops involving several clock genes, including period (per) and timeless (tim). In the fruitfly Drosophila, circadian oscillations in per expression occur in chemosensory cells of the antennae, even when the antennae are excised and maintained in isolated organ culture. Here we demonstrate a robust circadian rhythm in Drosophila in electrophysiological responses to two classes of olfactory stimuli. These rhythms are observed in wild-type flies during light-dark cycles and in constant darkness, but are abolished in per or tim null-mutant flies (per01 and tim01) which lack rhythms in adult emergence and locomotor behaviour. Olfactory rhythms are also abolished in the per 7.2:2 transgenic line in which per expression is restricted to the lateral neurons of the optic lobe. Because per 7.2:2 flies do not express per in peripheral oscillators, our results provide evidence that peripheral circadian oscillators are necessary for circadian rhythms in olfactory responses. As olfaction is essential for food acquisition, social interactions and predator avoidance in many animals, circadian regulation of olfactory systems could have profound effects on the behaviour of organisms that rely on this sensory modality.