We and others previously showed that in mouse embryos lacking the transcription factor Sox10, olfactory ensheathing cell (OEC) differentiation is disrupted, resulting in defective olfactory axon targeting and fewer gonadotropin-releasing hormone (GnRH) neurons entering the embryonic forebrain. The underlying mechanisms are unclear. Here, we report that OECs in the olfactory nerve layer express Frzb-encoding a secreted Wnt inhibitor with roles in axon targeting and basement membrane breakdown-from embryonic day (E)12.5, when GnRH neurons first enter the forebrain, until E16.5, the latest stage examined. The highest levels of Frzb expression are seen in OECs in the inner olfactory nerve layer, abutting the embryonic olfactory bulb. We find that Sox10 is required for Frzb expression in OECs, suggesting that loss of Frzb could explain the olfactory axon targeting and/or GnRH neuron migration defects seen in Sox10-null mice. At E16.5, Frzb-null embryos show significant reductions in both the volume of the olfactory nerve layer expressing the maturation marker Omp and the number of Omp-positive olfactory receptor neurons in the olfactory epithelium. As Omp upregulation correlates with synapse formation, this suggests that Frzb deletion indeed disrupts olfactory axon targeting. In contrast, GnRH neuron entry into the forebrain is not significantly affected. Hence, loss of Frzb may contribute to the olfactory axon targeting phenotype, but not the GnRH neuron phenotype, of Sox10-null mice. Overall, our results suggest that Frzb secreted from OECs in the olfactory nerve layer is important for olfactory axon targeting.