The peripheral olfactory system exhibits a remarkable regenerative capacity; a capacity which is demonstrated both by the continuous neurogenesis of olfactory receptor neurons in the olfactory epithelium and by the fact that new olfactory axons are able to grow into the adult CNS environment of the olfactory bulb. It is thought that these properties are in part due to basal stem cells in the olfactory epithelium that generate new olfactory receptor neurons, but also specialised glial cells that reside in the olfactory mucosa and bulb, termed olfactory ensheathing cells (OECs) which direct the newly generated axons to their target in the olfactory bulb (Barnett and Chang, 2004). We will describe the differentiation capacity of olfactory neural cells in culture from the olfactory mucosa and olfactory bulb. We will demonstrate that cells from the horizontal basal layer in the olfactory mucosa are able to differentiate into OECs. In addition we will describe the specific properties of OECs that make them a promising candidate for the transplant-mediated repair of CNS lesions (Fairless et al., 2005). A detailed comparative study has been made between OECs and the glial cell from the peripheral nervous system, Schwann cells. In these studies we find that OECs but not Schwann cells are able to mingle with astrocytes to a greater extent and do not induced in them characteristics typical of hypertrophy. Lastly, experiments will be described in which green fluorescent protein (GFP) labelled olfactory cells are transplanted into a model of spinal cord injury. In this model the ascending branches of the primary afferent fibres into the dorsal columns are cut using a wire knife. Data will be presented to show how the transplanted cell survive integrate and support regeneration of the dorsal columns.