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The terminal nerve ganglion (TNG) is a well-known structure of the peripheral nervous system in cartilaginous and teleost fishes. It derives from the olfactory placode during embryonic development. While the differentiation and migration of gonadotropin releasing hormone (GnRH)-expressing neurons from the olfactory placode has been well documented, the TNG has been neglected in birds and mammals, and its development is less well described. Here we describe the formation of a ganglion-like structure from migratory olfactory placodal cells in chicken. The TNG is surrounded by neural crest cells, but in contrast to other cranial sensory ganglia, we observed no neural crest corridor, and olfactory unsheathing cells appear only after the onset of neuronal migration. We identified Isl1 and Lhx2 as two transcription factors that label neuronal subpopulations in the forming TNG, distinct from GnRH1(+) cells, thereby revealing a diversity of cell types during the formation of the TNG. We also provide evidence for extensive apoptosis in the terminal nerve ganglion shortly after its formation, but not in other cranial sensory ganglia. Moreover, at later stages placode-derived neurons expressing GnRH1, Isl1 and/or Lhx2 become incorporated in the telencephalon. The integration of TNG neurons into the telencephalon together with the earlier widespread apoptosis in the TNG might be an explanation why the TNG in mammals and birds is much smaller compared to other vertebrates.