GABAergic interneurons play an important role in shaping the activity of excitatory pyramidal cells (PCs). How the various inhibitory cell types contribute to neuronal information processing, however, is not resolved. Here, we propose a functional role for a widespread network motif consisting of parvalbumin-(PV), somatostatin-(SOM) and vasoactive intestinal peptide (VIP)-expressing interneurons. Following the idea that PV and SOM interneurons control the distribution of somatic and dendritic inhibition onto PCs, we suggest that mutual inhibition between VIP and SOM cells translates weak inputs to VIP interneurons into large changes of somato-dendritic inhibition of PCs. Using a computational model, we show that the neuronal and synaptic properties of the circuit support this hypothesis. Moreover, we show that the SOM-VIP motif allows transient inputs to persistently switch the circuit between two processing modes, in which top-down inputs onto apical dendrites of PCs are either integrated or canceled.