The olfactory bulb (OB) is the first relay station in the brain where odor information from the olfactory epithelium is integrated, processed through its intrinsic neural circuitry, and conveyed to higher olfactory centers. Compared with profound mechanistic insights into olfactory axon wiring from the nose to the OB, little is known about the molecular mechanisms underlying the formation of functional neural circuitry among various types of neurons inside the OB. T-box transcription factor Tbr2 is expressed in various types of glutamatergic excitatory neurons in the brain including the OB projection neurons, mitral and tufted cells. Here we generated conditional knockout mice in which the Tbr2 gene is inactivated specifically in mitral and tufted cells from late embryonic stages. Tbr2 deficiency caused cell-autonomous changes in molecular expression including a compensatory increase of another T-box member, Tbr1, and a concomitant shift of vesicular glutamate transporter (VGluT) subtypes from VGluT1 to VGluT2. Tbr2-deficient mitral and tufted cells also exhibited anatomical abnormalities in their dendritic morphology and projection patterns. Additionally, several non-cell-autonomous phenotypes were observed in parvalbumin-, calbindin-, and 5T4-positive GABAergic interneurons. Furthermore, the number of dendrodendritic reciprocal synapses between mitral/tufted cells and GABAergic interneurons was significantly reduced. Upon stimulation with odorants, larger numbers of mitral and tufted cells were activated in Tbr2 conditional knockout mice. These results suggest that Tbr2 is required for not only the proper differentiation of mitral and tufted cells, but also for the establishment of functional neuronal circuitry in the OB and maintenance of excitatory-inhibitory balance crucial for odor information processing.