Glial cells are now recognised to be important modulators of the innate immune response in the nervous system. While the focus to date has primarily been on astrocytes and Schwann cells, the immunomodulatory properties of a third class of macroglia, olfactory ensheathing cells (OECs), also warrant investigation. OECs reside in the primary olfactory system and ensheath the olfactory nerves along their length from the nasal cavity to the olfactory bulbs in the central nervous system (CNS). Olfactory neurons are unique among neurons in providing uninterrupted conduits for neurotropic pathogens to spread from the external environment directly into the brain. There is continual turnover of olfactory neurons throughout life and OECs phagocytose the axonal debris to facilitate new axonal growth. Given that infected olfactory neurons undergo widespread apoptosis, it is likely that OECs contribute to the innate immune response to such infections. This chapter will discuss recent data demonstrating that OECs are immunocompetent cells in a manner similar to astrocytes, and that this has significant implications for the use of OECs in spinal cord transplantation therapies.