Central processing of acoustic cues is critically dependent on the balance between excitation and inhibition. This balance is particularly important for auditory neurons in the lateral superior olive, because these compare excitatory inputs from one ear and inhibitory inputs from the other ear to compute sound source location. By applying GABA(B) receptor antagonists during sound stimulation in vivo, it was revealed that these neurons adjust their binaural sensitivity through GABA(B) receptors. Using an in vitro approach, we then demonstrate that these neurons release GABA during spiking activity. Consequently, GABA differentially regulates transmitter release from the excitatory and inhibitory terminals via feedback to presynaptic GABA(B) receptors. Modulation of the synaptic input strength, by putative retrograde release of neurotransmitter, may enable these auditory neurons to rapidly adjust the balance between excitation and inhibition, and thus their binaural sensitivity, which could play an important role as an adaptation to various listening situations.