Neurons in the insect antennal lobe represent odors as spatiotemporal patterns of activity that unfold over multiple time scales. As these patterns unspool they decrease the overlap between odor representations and thereby increase the ability of the olfactory system to discriminate odors. Using a realistic model of the insect antennal lobe we examined two competing components of this process -lateral excitation from local excitatory interneurons, and slow inhibition from local inhibitory interneurons. We found that lateral excitation amplified differences between representations of similar odors by recruiting projection neurons that did not receive direct input from olfactory receptors. However, this increased sensitivity also amplified noisy variations in input and compromised the ability of the system to respond reliably to multiple presentations of the same odor. Slow inhibition curtailed the spread of projection neuron activity and increased response reliability. These competing influences must be finely balanced in order to decorrelate odor representations.