Recent studies provide initial insights into molecular mechanisms of olfaction. The identification of an odorant-sensitive adenylate cyclase which responds to most odorants, affords a second messenger system following odorant interactions with receptors. Cyclic nucleotide- and odorant-gated ion channels have been demonstrated in olfactory cilia, providing signalling systems in place of or in addition to protein phosphorylation. A unique odorant-binding protein localized to nasal mucosa binds odorants in proportion to their odoriferous potencies. Molecular cloning of the isolated protein reveals it to be a member of a family of proteins that serve as carriers for small lipophilic molecules such as retinol and cholesterol. The odorant-binding protein is localized to lateral nasal glands whose secretions are atomized into the tip of the nose where the binding protein presumably interacts with odorants in the inspired air.