A large body of work supports the proposal that transplantation of olfactory ensheathing cells (OECs) into nerve or spinal cord injuries can promote axonal regeneration and remyelination. Yet, some investigators have questioned whether the transplanted OECs associate with axons and form peripheral myelin, or if they recruit endogenous Schwann cells that form myelin. Olfactory bulbs from transgenic mice expressing the enhanced green fluorescent protein (eGFP) under the control of the 2-3-cyclic nucleotide 3-phosphodiesterase (CNPase) promoter were studied. CNPase is expressed in myelin-forming cells throughout their lineage. We examined CNPase expression in both in situ in the olfactory bulb and in vitro to determine if OECs express CNPase commensurate with their myelination potential. eGFP was observed in the outer nerve layer of the olfactory bulb. Dissociated OECs maintained in culture had both intense eGFP expression and CNPase immunostaining. Transplantation of OECs into transected peripheral nerve longitudinally associated with the regenerated axons. These data indicate that OECs in the outer nerve layer of the olfactory bulb of CNPase transgenic mice express CNPase. Thus, while OECs do not normally form myelin on olfactory nerve axons, their expression of CNPase is commensurate with their potential to form myelin when transplanted into injured peripheral nerve.