Drosophila olfactory receptor neurons project to the antennal lobe, the insect analog of the mammalian olfactory bulb. GABAergic synaptic inhibition is thought to play a critical role in olfactory processing in the antennal lobe and olfactory bulb. However, the properties of GABAergic neurons and the cellular effects of GABA have not been described in Drosophila, an important model organism for olfaction research. We have used whole-cell patch-clamp recording, pharmacology, immunohistochemistry, and genetic markers to investigate how GABAergic inhibition affects olfactory processing in the Drosophila antennal lobe. We show that many axonless local neurons (LNs) in the adult antennal lobe are GABAergic. GABA hyperpolarizes antennal lobe projection neurons (PNs) via two distinct conductances, blocked by a GABA A -and GABA B -type antagonist, respectively. Whereas GABA A receptors shape PN odor responses during the early phase of odor responses, GABA B receptors mediate odor-evoked inhibition on longer time scales. The patterns of odor-evoked GABA B -mediated inhibition differ across glomeruli and across odors. Finally, we show that LNs display broad but diverse morphologies and odor preferences, suggesting a cellular basis for odor-and glomerulus-dependent patterns of inhibition. Together, these results are consistent with a model in which odors elicit stimulus-specific spatial patterns of GABA release, and as a result, GABAergic inhibition increases the degree of difference between the neural representations of different odors.