We have derived highly enriched populations of ensheathing cells (ECs) from the olfactory nerve layer of neonatal rat olfactory bulbs. Contaminating cells, such as fibroblasts, were eliminated from EC cultures by cytosine arabinoside and immunoadsorption with antiserum to Thy-1.1. At the same time, ECs were stimulated to divide by the addition of bovine pituitary extract into the culture media. Confluent cultures containing 96-99% ECs, were comprised of either spindly bipolar cells or cells bearing multiple processes oriented on opposite poles. The ECs immunostained positively for GFAP, S-100 protein, N-CAMs and Neu 5, and were negative for the presence of neurofilaments. Scanning and transmission electron microscopy showed that the ultrastructure of the ECs resembled that in vivo. The nucleus was irregular in shape, intermediate filaments were usually scattered throughout the cytoplasm instead of being grouped into bundles, and rough endoplasmic reticulum existed as isolated expanded profiles.