The interplay between olfaction and higher cognitive processing has been documented in the adult brain; however, its development is poorly understood. In mice, shortly after birth, endogenous and stimulus-evoked activity in the olfactory bulb (OB) boosts the oscillatory entrainment of downstream lateral entorhinal cortex (LEC) and hippocampus (HP). However, it is unclear whether early OB activity has a long-lasting impact on entorhinal-hippocampal function and cognitive processing. Here, we chemogenetically silenced the synaptic outputs of mitral/tufted cells, the main projection neurons in the OB, during postnatal days 8–10. The transient manipulation leads to a long-lasting reduction of oscillatory coupling and weaker responsiveness to stimuli within developing entorhinal-hippocampal circuits accompanied by dendritic sparsification of LEC pyramidal neurons. Moreover, the transient silencing reduces the performance in behavioral tests involving entorhinal-hippocampal circuits later in life. Thus, neonatal OB activity is critical for the functional LEC-HP development and maturation of cognitive abilities.