Adult neural stem cells/progenitor cells residing in the basal layer of the olfactory epithelium are capable of reconstituting the neuroepithelium even after severe damage. The molecular events underlying this regenerative capacity remain elusive. Here we show that the repair of neuroepithelium after lesioning is accompanied by an acute, but self-limited, inflammatory process. Attenuation of inflammatory cell recruitment and cytokine production by dexamethasone impairs proliferation of progenitor horizontal basal cells (HBCs) and subsequent neuronal differentiation. Using TNF-α receptor-deficient mice, we identify TNF-α signaling as an important contributor to this inflammatory and reparative process, mainly through TNF-α receptor 1. HBC-selective genetic ablation of RelA (p65), the transcriptional activator of the NF-κB pathway, retards inflammation and impedes proliferation at the early stages of regeneration and suggests HBCs directly participate in cross-talk between immune response and neurogenesis. Loss of RelA in the regenerating neuroepithelium perturbs the homeostasis between proliferation and apoptosis while enhancing JNK signaling. Together, our results support a model in which acute inflammation after injury initiates important regenerative signals in part through NF-κB–mediated signaling that activates neural stem cells to reconstitute the olfactory epithelium.