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 focal 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.