Shep1 is a multidomain signaling protein that forms a complex with Cas, a key scaffolding component of integrin signaling pathways, to promote the migration of non-neuronal cells. However, the physiological function of Shep1 in the nervous system remains unknown. Interestingly, we found that Shep1 and Cas are both concentrated in the axons of developing olfactory sensory neurons (OSNs). These neurons extend their axons from the olfactory epithelium to the olfactory bulb located at the anterior tip of the forebrain. However, in developing Shep1 knock-out mice, we did not detect penetration of OSN axons across the pial basement membrane surrounding the olfactory bulb, suggesting that Shep1 function is important for the establishment of OSN connections with the olfactory bulb. Interestingly, we observed reduced levels of Cas tyrosine phosphorylation in OSN axons of Shep1 knock-out mice, suggesting compromised Cas signaling function. Indeed, when embedded in a three-dimensional gel of basement membrane proteins, explants from Shep1 knock-out olfactory epithelium extend neuronal processes less efficiently than explants from control epithelium. Furthermore, ectopic expression of Shep1 in non-neuronal cells promotes cell migration through a collagen gel. Later in development, loss of Shep1 function also causes a marked reduction in olfactory bulb size and disruption of bulb lamination, which may be primarily attributable to the defective innervation. The greatly reduced OSN connections and hypoplasia of the olfactory bulb, likely resulting in anosmia, are reminiscent of the symptoms of Kallmann syndrome, a human developmental disease that can be caused by mutations in a growing number of genes.