The pigeon olfactory nerve has been sectioned to explore the course of retrograde degeneration of the sensory neurons’ perikarya, which are located in the olfactory neuroepithelium. Both light- and electron-microscopic observations have shown that from 3 to 8 days after axotomy the sensory neurons undergo retrograde, irreversible degeneration. Following disappearance of the mature neurons, the basal cells of the neuroepithelium actively divide and differentiate into mature olfactory sensory neurons. Consequently, the basal cells represent true stem cells of the olfactory sensory neurons. The olfactory mucosa regains a structural organization close to normal in a period of 30–50 days after axotomy. These observations indicate that, when the primary olfactory neurons degenerate as a consequence of the experimental section of their axons, restitutio adintegrum of the sensory olfactory connections can be reestablished by new elements which differentiate from basal cells of the olfactory neuroepithelium.