Small-eye (Sey) is a spontaneous, semidominant murine mutation that results from a point mutation in the Pax-6 gene. Both the eyes and the olfactory system fail to develop in homozygotes and these animals die neonatally. Heterozygotes (Sey/+) have different degrees of eye abnormalities including decreased lens size and cataracts. In the present study, we examined whether one mutated allele of Pax-6 also affects olfactory system development. By 42 days of age, main olfactory bulb volume was significantly decreased in Sey/+ animals compared with wild-type littermates, and this effect was even more dramatic in 70-day-old animals. In contrast, there was no effect on accessory olfactory bulb, olfactory epithelial, or vomeronasal organ development at any age in Sey/+ animals, demonstrating the specificity of the effect. In the main olfactory bulb, the largest differences in laminar volume were found in the glomerular and granule cell layers. These layers contain the olfactory bulb interneurons, and a subpopulation of these cells were found to be Pax-6 immunoreactive. Examination of the neurochemical consequences of this mutation showed that the number of both tyrosine hydroxylase (TH)- and gamma-aminobutyric acid (GABA)-immunoreactive profiles were dramatically decreased in Sey/+ animals as compared with controls. In contrast, neither calretinin nor calbindin immunoreactivity was affected by this mutation. Dual-labeling immunohistochemistry showed that nearly all TH-immunoreactive cells and a subpopulation of GABA-immunoreactive cells coexpressed Pax-6. However, calretinin- and calbindin-immunoreactive cells were not Pax-6 immunopositive. These data indicate that two normal alleles of Pax-6 are required for normal olfactory bulb development and, as part of this effect, this gene may be involved in the development of specific neurotransmitter systems.