In the antennal lobe of Drosophila, information about odors is transferred from olfactory receptor neurons (ORNs) to projection neurons (PNs), which then send axons to neurons in the lateral horn of the protocerebrum (LHNs) and to Kenyon cells (KCs) in the mushroom body. The transformation from ORN to PN responses can be described by a normalization model similar to what has been used in modeling visually responsive neurons. We study the implications of this transformation for the generation of LHN and KC responses under the hypothesis that LHN responses are highly selective and therefore suitable for driving innate behaviors, whereas KCs provide a more general sparse representation of odors suitable for forming learned behavioral associations. Our results indicate that the transformation from ORN to PN firing rates in the antennal lobe equalizes the magnitudes of and decorrelates responses to different odors through feedforward nonlinearities and lateral suppression within the circuitry of the antennal lobe, and we study how these two components affect LHN and KC responses.