Neuropeptides play important physiological functions during distinct behaviors such as arousal, learning, memory, and reproduction. However, the role of local, extrahypothalamic neuropeptide signaling in shaping synapse formation and neuronal plasticity in the brain is not well understood. Here, we characterize the spatiotemporal expression profile of the neuropeptide corticotropin-releasing hormone (CRH) and its receptor CRHR1 in the mouse OB throughout development. We found that CRH-expressing interneurons are present in the external plexiform layer, that its cognate receptor is expressed by granule cells, and show that both CRH and CRHR1 expression enriches in the postnatal period when olfaction becomes important towards olfactory-related behaviors. Further, we provide electrophysiological evidence that CRHR1-expressing granule cells functionally respond to CRH ligand, and that the physiological circuitry of CRHR1 knockout mice is abnormal, leading to impaired olfactory behaviors. Together, these data suggest a physiologically relevant role for local CRH signaling towards shaping the neuronal circuitry within the mouse OB.