Olfactory receptor neurons (ORNs) are replaced and differentiate in adult animals, but differentiation in dissociated cell culture has not been demonstrated. To test whether contact with the CNS regulates maturation, neonatal rat olfactory cells were grown on a culture substrate or on CNS astrocytes. Mature ORNs, immunopositive for olfactory marker protein (OMP), disappeared rapidly from both systems. Neurons positive for neuron-specific tubulin (immature and mature) disappeared from substrate-only cultures, but remained abundant in the cocultures. OMP-positive neurons reappeared after 10 days in vitro. Pulse labeling with [3H]thymidine showed extensive neurogenesis of both immature and mature olfactory neurons. This demonstrates, in vitro, both division and differentiation of olfactory progenitor cells.