This study examined the ultrastructure of the region of transition where fascicles of olfactory axons leave the peripheral nervous system (PNS) to enter the central nervous system (CNS), the so-called PNS-CNS transitional zone. Adult rats were transcardially perfused with a solution of 1% glutaraldehyde and 1% paraformaldehyde, decapitated, and the heads decalcified over a period of several weeks in a solution of 1% glutaraldehyde in 0.1 M tetrasodium ethylenediamine tetraacetic acid; the latter solution was changed daily. It was found that astrocytes did not form the glia limitans at the nerve entry zone, unlike the situation that exists in other cranial and spinal nerves. Rather, the glia limitans in this region of the olfactory bulb was formed by a special type of glial cell, referred to as an ensheathing cell. Ensheathing cells are found only in the nerve fiber layer of the olfactory bulb. They possess a mixture of Schwann cell and astrocytic features and are more likely to be of placodal than of CNS origin. The meningeal coverings of the olfactory nerve rootlets and of the olfactory bulb are also described and the functional implications of the findings discussed.