Olfactory sac and olfactory lamellae cell of wild grey mullet (Mugil cephalus, 35.5-40 cm in length) are studied by technology of paraffin section and transmission electron microscope. The results show that the olfactory organ of grey mullet has two flat ellipsoidal olfactory sacs in the both side of the head. Each sac has an incurrent and an excurrent nostril interlinked with the outside world. In size, the olfactory sac is smaller than the eye and the average ratio between them is 0.8. The ratio between length and breadth of the olfactory sac is 2.09. There are 18-25 lanceolated primary olfactory lamellas in the olfactory sac which are perpendicular to left and right sides of raphe at a orderly up-inclined arrangement state. Olfactory lamella is really a composite that is composed of two layers of olfactory epithelium and a central core. The central core is located at the central part of the olfactory lamella, which is composed of loose connective tissue and large amount of capillaries. The olfactory epithelium is divided into sensory area and non-sensory area.The inside of the olfactory lamella is the olfactory sensory area, which have developed cilia in a continuous distribution state. The non-sensory area has fewer cilia that located in the edge of olfactory lamella. By means of light microscope and transmission electron microscope, the results show that the cells of olfactory epithelium can be broadly divided into five categories: basal cells , supporting cells, ciliated non-sensory cells, ciliated receptor cell and rod cells. Conclusion is that the grey mullet is a fish that both good at sight and smell.