The olfactory bulb is a protruding structure formed at the rostral end of the telencephalon. Pax6-mutant mice and rats lack the olfactory bulb and, instead, develop an olfactory bulb-like structure at the lateral part of the telencephalon. Here, we report that ectopic formation of the olfactory bulb-like structure in these mutants is caused by the abnormal migration of mitral cell progenitors, which first differentiate within the olfactory bulb. Cell-tracing experiments in whole embryos in culture indicate that, in the mutants, the mitral cell progenitors that originate from the rostral part of the telencephalon migrate caudally toward the lateral part of the telencephalon. Cell transplantation demonstrates that the abnormal cell migration is not autonomous to the mitral cell progenitors themselves. The mislocation of the olfactory bulb in the mutant is not caused by loss of olfactory nerve innervation. Furthermore, transfection of a Pax6-expression vector to the mutant telencephalon restores the normal migration of mitral cell progenitors. These results provide evidence that Pax6 is required to position the mitral cell progenitors at the rostral end of the telencephalon.