The sense of smell, or olfactory sense, occurs in olfactory epithelium that occupies a small area on the roof of the nasal cavity. The olfactory receptor cells are bipolar neurons whose dendrites have terminal knobs with hairlike cilia protruding beyond the epithelial surface. The cilia, or olfactory hairs, initiate an action potential when they react with a molecule from an inhaled vapor. However, molecules of the vapor must first dissolve in the mucus that covers the cilia before they can be detected. The action potential is transmitted along the axons of the olfactory receptor cells (which form the olfactory nerves) to the olfactory bulbs, where they synapse with sensory neurons of the olfactory tract.

Other cells of the olfactory epithelium include columnar supporting cells and basal cells. The basal cells continually divide to produce new olfactory receptor cells that, because of their short life, need regular replacement. The replacement of olfactory receptor cells is unusual because most other nerve cells cannot be replaced.

The mucus that lines the olfactory epithelium is produced by olfactory glands that occupy the connective tissue above the olfactory epithelium.