The β-site amyloid precursor protein cleaving enzyme 1 (BACE1) is necessary to generate the Aβ peptide, which is implicated in Alzheimer's disease pathology. Studies show that the expression of BACE1 and its protease activity are tightly regulated, but the physiological function of BACE1 remains poorly understood. Recently, numerous axon guidance proteins were identified as potential substrates of BACE1. Here, we examined the consequences of loss of BACE1 function in a well-defined in vivo model system of axon guidance, mouse olfactory sensory neurons (OSNs). The BACE1 protein resides predominantly in proximal segment and the termini of OSN axons, and the expression of BACE1 inversely correlates with odor-evoked neural activity. The precision of targeting of OSN axons is disturbed in both BACE1 null and, surprisingly, in BACE1 heterozygous mice. We propose that BACE1 cleavage of axon guidance proteins is essential to maintain the connectivity of OSNs in vivo.