Odors experienced as juveniles can have significant effects on the behavior of mature organisms. A dramatic example of this occurs in salmon, where the odors experienced by developing fish determine the river to which they return as adults. Further examples of olfactory memories are found in many animals including vertebrates and invertebrates. Yet, the cellular and molecular bases underlying the formation of olfactory memory are poorly understood. We have devised a series of experiments to determine whether zebrafish can form olfactory memories much like those observed in salmonids. Here we show for the first time that zebrafish form and retain olfactory memories of an artificial odorant, phenylethyl alcohol (PEA), experienced as juveniles. Furthermore, we demonstrate that exposure to PEA results in changes in gene expression within the olfactory sensory system. These changes are evident by in situ hybridization in the olfactory epithelium of the developing zebrafish. Strikingly, our analysis by in situ hybridization demonstrates that the transcription factor, otx2, is up regulated in the olfactory sensory epithelia in response to PEA. This increase is evident at 2-3 days postfertilization and is maintained in the adult animals. We propose that the changes in otx2 gene expression are manifest as an increase in the number of neuronal precursors in the cells olfactory epithelium of the odor-exposed fish. Thus, our results reveal a role for the environment in controlling gene expression in the developing peripheral nervous system.