Drosophila olfactory local interneurons (LNs) in the antennal lobe are highly diverse and variable. How and when distinct types of LNs emerge, differentiate, and integrate into the olfactory circuit is unknown. Through systematic developmental analyses, we found that LNs are recruited to the adult olfactory circuit in three groups. Group 1 LNs are residual larval LNs. Group 2 are adult-specific LNs that emerge before cognate sensory and projection neurons establish synaptic specificity, and Group 3 LNs emerge after synaptic specificity is established. Group 1 larval LNs are selectively reintegrated into the adult circuit through pruning and re-extension of processes to distinct regions of the antennal lobe, while others die during metamorphosis. Precise temporal control of this pruning and cell death shapes the global organization of the adult antennal lobe. Our findings provide a road map to understand how LNs develop and contribute to constructing the olfactory circuit.