Olfactory systems serve as excellent model systems for the study of numerous widespread aspects of neural development and also for the elucidation of features peculiar to the formation of neural circuits specialized to process odor inputs. Accumulated research reveals a fine balance between developmental autonomy of olfactory structures and intercellular interactions essential for their normal development. Recent findings have uncovered evidence for more autonomy than previously realized, but simultaneously have begun to reveal the complex cellular and molecular underpinnings of key interactions among neurons and glial cells at several important steps in olfactory development. Striking similarities in the functional organization of olfactory systems across vertebrate and invertebrate species allow the advantages of different species to be used to address common issues. Our own work in the moth Manduca sexta has demonstrated reciprocal neuron-glia interactions that have key importance in two aspects of development, the sorting of olfactory receptor axons into fascicles targeted for specific glomeruli and the creation of glomeruli. Studies in vertebrate species suggest that similar neuron-glia interactions may underlie olfactory development, although here the roles have not been tested so directly. Similar cellular interactions also are likely to play roles in development of some other systems in which axons of intermixed neurons must sort according to target specificity and systems in which reiterated modules of synaptic neuropil develop.