In the ascending auditory pathway, the inferior colliculus (IC) receives and integrates excitatory and inhibitory inputs from many lower auditory nuclei, intrinsic projections within the IC, contralateral IC through the commissure of the IC and from the auditory cortex. All these connections make the IC a major center for subcortical temporal and spectral integration of auditory information. In this study, we examine bilateral collicular interaction in modulating amplitude-domain signal processing using electrophysiological recording, acoustic and focal electrical stimulation. Focal electrical stimulation of one (ipsilateral) IC produces widespread inhibition (61.6%) and focused facilitation (9.1%) of responses of neurons in the other (contralateral) IC, while 29.3% of the neurons were not affected. Bilateral collicular interaction produces a decrease in the response magnitude and an increase in the response latency of inhibited IC neurons but produces opposite effects on the response of facilitated IC neurons. These two groups of neurons are not separately located and are tonotopically organized within the IC. The modulation effect is most effective at low sound level and is dependent upon the interval between the acoustic and electric stimuli. The focal electrical stimulation of the ipsilateral IC compresses or expands the rate-level functions of contralateral IC neurons. The focal electrical stimulation also produces a shift in the minimum threshold and dynamic range of contralateral IC neurons for as long as 150 minutes. The degree of bilateral collicular interaction is dependent upon the difference in the best frequency between the electrically stimulated IC neurons and modulated IC neurons. These data suggest that bilateral collicular interaction mainly changes the ratio between excitation and inhibition during signal processing so as to sharpen the amplitude sensitivity of IC neurons. Bilateral interaction may be also involved in acoustic-experience-dependent plasticity in the IC. Three possible neural pathways underlying the bilateral collicular interaction are discussed.