Transection of olfactory nerves causes degeneration of receptor neurons in the olfactory epithelium, followed by generation of new receptor neurons. We have carried out intracellular recordings to document changes in epithelial cell populations during receptor neuron degeneration and regrowth at 1, 2, and 4 weeks following olfactory nerve transection in the salamander. Receptor neurons were greatly reduced in numbers at 1 week, and gradually returned to the normal percentage of intracellular penetrations by 4 weeks. They had a resting membrane potential between -30 and -50 mV and high input resistance, 100 to 600 megohms, characteristically seen in normal epithelium. However, at 1 week, the receptor neurons were able to generate only a single spike in response to injected current, and did not re-acquire their ability to respond repetitively until 4 weeks. Cells with the properties of immature receptor neurons (resting membrane potential between -30 and -50 mV and high input resistance, 100 to 600 megohms, but unable to generate spikes) increased significantly in number in the post-transection period. This correlates with the burst of mitotic activity giving rise to new receptor neurons after nerve transection. Supporting cells changed their properties in the aftermath of transection. One type (A) showed a decrease in resting membrane potential and a small increase in input resistance. A second type (B) showed a very large increase in input resistance. These results imply that the degenerating receptor neurons transmit a signal that leads to changes in the functional properties of the glial-like supporting cells. These may involve changes in the membrane properties or in electrical coupling between cells.