Olfactory ensheathing cells (OECs) are a specialized class of glia, wrapping around olfactory sensory axons that target the olfactory bulb (OB) and cross the peripheral nervous system/central nervous system boundary during development and continue to do so post-natally. OEC subpopulations perform distinct subtype-specific functions dependent on their maturity status. Disrupted OEC development is thought to be associated with abnormal OB morphogenesis, leading to anosmia, a defining characteristic of Kallmann syndrome. Hence, anosmin-1 encoded by Kallmann syndrome gene (KAL-1) might modulate OEC differentiation/maturation in the OB. We performed in ovo electroporation of shRNA in the olfactory placode to knock-down kal in chick embryos, resulting in abnormal OB morphogenesis and loss of olfactory sensory axonal innervation into OB. BLBP-expressing OECs appeared to form a thinner and poorly organized outmost OB layer where SOX10 expressing OECs were completely absent with emergence of GFAP-expressing OECs. Furthermore, in embryonic day 10 chick OB explant cultures, GFAP expression in OECs accumulating along the OB nerve layers was dramatically reduced by recombinant anosmin-1. We then purified immature OECs from embryonic day 10 chick OB. These cells express GFAP after 7 days in vitro, exhibiting a multipolar morphology. Overexpression of chick anosmin, exogenous anosmin-1 or FGF2 could inhibit GFAP expression with cells presenting elongated morphology, which was blocked by the FGF receptor inhibitor Su5402. These data demonstrate that anosmin-1 functions via FGF signalling in regulating OEC maturation, thereby providing a permissive glial environment for axonal innervation into the OB during development.