Odors are coded at the input level of the olfactory bulb by a spatial map of activated glomeruli, reflecting different odorant receptors (ORs) stimulated in the nose. Here we examined the function of local synaptic processing within glomeruli in transforming these input patterns into an output for the bulb, using patch-clamp recordings and calcium imaging in rat bulb slices. Two types of transformations were observed at glomeruli, the first of which produced a bimodal, "on/off" glomerular signal that varied probabilistically depending on olfactory receptor neuron (ORN) input levels. The bimodal response behavior was seen in glomerular synaptic responses, as well as in action potential ("spike") firing, wherein all mitral cells affiliated with a glomerulus either engaged in prolonged spike bursts or did not spike at all. In addition, evidence was obtained that GABAergic periglomerular (PG) cells that surround a glomerulus can prevent activation of a glomerulus through inhibitory inputs targeted onto excitatory external tufted cells. The path of PG cell activation appeared to be confined to one glomerulus, such that ORNs at one glomerulus initiated inhibition of the same glomerulus. The observed glomerular "self-inhibition" provides a mechanism of filtering odor signals that would be an alternative to commonly proposed mechanisms of lateral inhibition between OR-specific glomeruli. In this case, selective suppression of weak odor signals could be achieved based on the difference in the input resistance of PG cells versus excitatory neurons at a glomerulus.