Dynamic balance of excitation and inhibition is crucial for network stability and cortical processing, but it is unclear how this balance is achieved at different membrane potentials (V(m)) of cortical neurons, as found during persistent activity or slow V(m) oscillation. Here we report that a V(m)-dependent modulation of recurrent inhibition between pyramidal cells (PCs) contributes to the excitation-inhibition balance. Whole-cell recording from paired layer-5 PCs in rat somatosensory cortical slices revealed that both the slow and the fast disynaptic IPSPs, presumably mediated by low-threshold spiking and fast spiking interneurons, respectively, were modulated by changes in presynaptic V(m). Somatic depolarization (>5 mV) of the presynaptic PC substantially increased the amplitude and shortened the onset latency of the slow disynaptic IPSPs in neighboring PCs, leading to a narrowed time window for EPSP integration. A similar increase in the amplitude of the fast disynaptic IPSPs in response to presynaptic depolarization was also observed. Further paired recording from PCs and interneurons revealed that PC depolarization increases EPSP amplitude and thus elevates interneuronal firing and inhibition of neighboring PCs, a reflection of the analog mode of excitatory synaptic transmission between PCs and interneurons. Together, these results revealed an immediate V(m)-dependent modulation of cortical inhibition, a key strategy through which the cortex dynamically maintains the balance of excitation and inhibition at different states of cortical activity.