Fish detect chemical stimuli through two major chemosensory channels, olfaction and gustation. All current evidence indicates that olfaction is a major mediator of chemical signals and is involved in diverse teleost behavior. This paper describes the morphological components and the basic principles of developmental patterns of the olfactory organ as well as cellular differentiation of receptors in rainbow troutOncorhynchus mykiss(formerlySalmo gairdneri). The olfactory organ originates from an anlage formed by the ectoderm on the ventrolateral part of the head during stage 19 (11 d postfertilization). Ciliated receptor cells appear at stage 24 (day 18) and dominate until immature microvillar receptor cells develop in stage-28 (day 26) embryos. During this period, the olfactory placode continues a lateral and upward migration. At stage 29, the day of hatching, the olfactory groove is enclosed by flaps of skin, and by stage 33, distinct anterior and posterior nares are formed. Spontaneous electrical activity is recorded from the olfactory mucosa as early as stage 25, and neural responses to chemical stimuli are induced from stage-26 embryos that contain sparse ciliated receptor cells. Stereochemical specificity of receptor responses is evident at these stages. We conclude that the olfactory receptor has two ontogenetically distinct forms, ciliated and microvillar. By the time of hatching, both cell types are mature and capable of responding and discriminating among chemical stimuli. The functional distinction of the olfactory system is discussed further in relation to the gustatory system, which is endodermal in origin and is still incomplete at hatching.