The sense of smell enables insects to recognize and discriminate a broad range of volatile chemicals in their environment originating from prey, host plants and conspecifics. These olfactory cues are received by olfactory sensory neurons (OSNs) that relay information about food sources, oviposition sites and mates to the brain and thus elicit distinct odor-evoked behaviors. Research over the last decades has greatly advanced our knowledge concerning the molecular basis underlying the reception of odorous compounds and the mechanisms of signal transduction in OSNs. The emerging picture clearly indicates that OSNs of insects recognize odorants and pheromones by means of ligand-binding membrane proteins encoded by large and diverse families of receptor genes. In contrast, the mechanisms of the chemo-electrical transduction process are not fully understood; the present status suggests a contribution of ionotropic as well as metabotropic mechanisms. In this review, we will summarize current knowledge on the peripheral mechanisms of odor sensing in insects focusing on olfactory receptors and their specific role in the recognition and transduction of odorant and pheromone signals by OSNs.