Intracellular recordings were made from the major neurites of local interneurons in the moth antennal lobe. Antennal nerve stimulation evoked 3 patterns of postsynaptic activity: (i) a short-latency compound excitatory postsynaptic potential that, based on electrical stimulation of the antennal nerve and stimulation of the antenna with odors, represents a monosynaptic input from olfactory afferent axons (71 out of 86 neurons), (ii) a delayed activation of firing in response to both electrical- and odor-driven input (11 neurons), and (iii) a delayed membrane hyperpolarization in response to antennal nerve input (4 neurons). Simultaneous intracellular recordings from a local interneuron with short-latency responses and a projection (output) neuron revealed unidirectional synaptic interactions between these two cell types. In 20% of the 30 pairs studied, spontaneous and current-induced spiking activity in a local interneuron correlated with hyperpolarization and suppression of firing in a projection neuron. No evidence for recurrent or feedback inhibition of projection neurons was found. Furthermore, suppression of firing in an inhibitory local interneuron led to an increase in firing in the normally quiescent projection neuron, suggesting that a disinhibitory pathway may mediate excitation in projection neurons. This is the first direct evidence of an inhibitory role for local interneurons in olfactory information processing in insects. Through different types of multisynaptic interactions with projection neurons, local interneurons help to generate and shape the output from olfactory glomeruli in the antennal lobe.