Sheep learn to recognize the odours of their lambs within two hours of giving birth, and this learning involves synaptic changes within the olfactory bulb. Specifically, mitral cells become increasingly responsive to the learned odour, which stimulates release of both glutamate and GABA (gamma-aminobutyric acid) neurotransmitters from the reciprocal synapses between the excitatory mitral cells and inhibitory granule cells. Nitric oxide (NO) has been implicated in synaptic plasticity in other regions of the brain as a result of its modulation of cyclic GMP levels. Here we investigate the possible role of NO in olfactory learning. We find that the neuronal enzyme nitric oxide synthase (nNOS) is expressed in both mitral and granule cells, whereas the guanylyl cyclase subunits that are required for NO stimulation of cGMP formation are expressed only in mitral cells. Immediately after birth, glutamate levels rise, inducing formation of NO and cGMP, which potentiate glutamate release at the mitral-to-granule cell synapses. Inhibition of nNOS or guanylyl cyclase activity prevents both the potentiation of glutamate release and formation of the olfactory memory. The effects of nNOS inhibition can be reversed by infusion of NO into the olfactory bulb. Once memory has formed, however, inhibition of nNOS or guanylyl cyclase activity cannot impair either its recall or the neurochemical release evoked by the learned lamb odour. Nitric oxide therefore seems to act as a retrograde and/or intracellular messenger, being released from both mitral and granule cells to potentiate glutamate release from mitral cells by modulating cGMP concentrations. We propose that the resulting changes in the functional circuitry of the olfactory bulb underlie the formation of olfactory memories.