Olfactory ensheathing cells (OECs) transplantation is emerging as promising nerve repair therapy, particularly for spinal cord injury (SCI), owing to their intrinsic regenerative capacity within the olfactory system. Perineural fibroblasts are natural partners of OECs within the olfactory nerve and co-transplantation with OECs may improve transplantation repair outcomes. However, little is known about the natural interactions of OECs and fibroblasts during the chaotic state following an injury. Using a mouse model, we temporarily damaged the olfactory nerves using methimazole. At key stages of degeneration and regeneration of the olfactory nerve, full thickness olfactory mucosae were isolated to perform wholemount immunohistology analysis. In contrast to previous reports that the OECs maintain the integrity of the nerve fascicles after injury, we observed that there was considerable disintegration of the structure of nerve fascicles and extensive remodeling over the course of injury and recovery. OECs and fibroblasts both reacted and participated in the injury stage and helped in the recovery. While the newly regenerated axons reestablished connections to the olfactory bulb, the arrangement of nerve fascicles within the lamina propria was altered. The outcomes of this study support the use of a combination cell therapy for SCI in which OECs and fibroblasts are co-transplanted, which may be more beneficial than using OECs alone. These results also have implications for diseases and infections in which the sense of smell is affected as the remodeling of the olfactory nerve fascicles may explain changes in olfactory acuity.