The sensory neurons that subserve olfaction, olfactory receptor neurons (ORNs), are regenerated throughout life, making the neuroepithelium in which they reside [the olfactory epithelium (OE)] an excellent model for studying how intrinsic and extrinsic factors regulate stem cell dynamics and neurogenesis during development and regeneration. Numerous studies indicate that transcription factors and signaling molecules together regulate generation of ORNs from stem and progenitor cells during development, and work on regenerative neurogenesis indicates that these same factors may operate at postnatal ages as well. This review describes our current knowledge of the identity of the OE neural stem cell; the different cell types that are thought to be the progeny (directly or indirectly) of this stem cell; and the factors that influence cell differentiation in the OE neuronal lineage. We review data suggesting that (1) the ORN lineage contains three distinct proliferating cell types—a stem cell and two populations of transit amplifying cells; (2) in established OE, these three cell types are present within the basal cell compartment of the epithelium; and (3) the stem cell that gives rise ultimately to ORNs may also generate two glial cell types of the primary olfactory pathway: sustentacular cells (SUS), which lie within OE proper; and olfactory ensheathing cells (OEC), which envelope the olfactory nerve. In addition, we describe factors that are both made by and found within the microenvironment of OE stem and progenitor cells, and which exert crucial growth regulatory effects on these cells. Thus, as with other regenerating tissues, the basis of regeneration in the OE appears be a population of stem cells, which resides within a microenvironment (niche) consisting of factors crucial for maintenance of its capacity for proliferation and differentiation.