The early neurogenesis of the mouse olfactory nerve, from its exist at the nasal epithelium to its entrance into the embryonic telencephalon, has been investigated by using the rapid Golgi method and electron microscopy. Previously unrecognized anatomical and possible functional interrelationships between developing olfactory nerve axons and their sheath cells have been observed: 1) at their exit from sensory epithelium (nasal compartment), 2) at their contact with the CNS surface (intracranial compartment), and 3) at their entrance into the embryonic telencephalon (central nervous tissue compartment). Based on these observations the anatomy of the mouse olfactory nerve is herein redefined. Exiting olfactory nerve axons and sheath cells from the same regions of the nasal epithelium establish an early association which is maintained up to their terminal glomerular neuropile. No disruptions have been found in either the olfactory nerve axons or in the continuity of their sheath cells from exit at the nasal epithelium to entrance into the developing olfactory bulb. Corresponding olfactory nerve axons with their sheath cells enter together and become incorporated into the developing olfactory bulb as units. Consequently, the cellular envelope of the olfactory glomerulus must be composed of olfactory sheath cells rather than of glial (astroglial) cells from the CNS. With this simple anatomical arrangement, a topographic map of the sensory epithelium could be established progressively in the developing olfactory bulb. Eventually, "regenerating" olfactory nerve axons from different nasal regions could be guided by their specific sheath cell conduits toward their target glomeruli; hence, the olfactory message may be maintained undisturbed throughout the life span of the animal. In addition, olfactory nerve axons establish synaptic-like contacts with their corresponding sheath cells prior to or during the perforation of the CNS surface. Reciprocal recognition between corresponding axons and their sheath cells at this crucial stage in their neurogenesis may play a significant role in the establishment of their terminal glomerulus. This new concept of the anatomy of the mammalian olfactory nerve should provide insights helpful in clarifying some of the still-unresolved questions regarding the structural and functional organizations of this primitive system.