Olfaction depends on the differential activation of olfactory receptor neurons (ORNs) and on the proper transmission of their activities to the brain. ORNs select individual receptors to express, and they send axons to particular targets in the brain. Little is known about the molecular mechanisms underlying either process. We have identified a new Drosophila POU gene, pdm3, that is expressed in ORNs. Genetic analysis shows that pdm3 is required for odor response in one class of ORNs. We find that pdm3 acts in odor receptor expression in this class, and that the odor response can be rescued by the receptor. Another POU gene, acj6, is required for receptor expression in the same class, and we find a genetic interaction between the two POU genes. The results support a role for a POU gene code in receptor gene choice. pdm3 is also expressed in other ORN classes in which it is not required for receptor expression. For two of these classes, pdm3 is required for normal axon targeting. Thus, this mutational analysis, the first for a POU class VI gene, demonstrates a role for pdm3 in both of the processes that define the functional organization of ORNs in the olfactory system.