Lobsters have a self-renewing olfactory system and, like many animals, continuously replace old or dying olfactory receptor neurons. In addition, lobsters are able to regenerate the peripheral olfactory system even after complete loss. The olfactory sensors in lobsters are located distally on a pair of antennules. These antennules are often damaged, but this has little impact on the lobster's sense of smell because damaged olfactory tissue is rapidly replaced. In this study, we investigated damage-induced regeneration of the olfactory system by measuring cell proliferation following controlled amputation. We show that amputation-induced regeneration occurs as a result of up-regulating the normal development of olfactory sensors. A unique feature of up-regulated development is the formation of patches of proliferating cells within the antennular epithelium. Epithelial patches were typically formed between 3 and 10 days postamputation on the amputated side. They were characterized by their: proximal position with respect to developing clusters of olfactory receptor neurons (ORNs); tendency to form two discrete patches within the borders of each existing annulus; cell size, which was approximately twice that of mature ORNs; and location within the ventral epithelium. The development of epithelial patches was immediately followed by proliferation of clusters of ORNs and associated glial cells, and the level of this proliferation increased significantly during the premolt stage of the lobster's molt cycle. These epithelial patches may represent populations of precursor cells, because they develop in response to amputation and immediately precede development of cell clusters composed of ORNs and glia. Possible regulatory signals controlling epithelial patch development are discussed.