Almost all synapses show activity-dependent dynamic changes in efficacy. Numerous studies have explored the mechanisms underlying different forms of short-term synaptic plasticity (STP), but the functional role of STP for circuit output and animal behavior is less understood. This is particularly true for inhibitory synapses that can play widely varied roles in circuit activity. We review recent findings on the role of synaptic STP in sensory, pattern generating, thalamocortical, and hippocampal networks, with a focus on synaptic inhibition. These studies show a variety of functions including sensory adaptation and gating, dynamic gain control and rhythm generation. Because experimental manipulations of STP are difficult and nonspecific, a clear demonstration of STP function often requires a combination of experimental and computational techniques.