Evidence for coexpression of two or more classic neurotransmitters in neurons has increased, but less is known about cotransmission. Ventral tegmental area (VTA) neurons corelease dopamine (DA), the excitatory transmitter glutamate, and the inhibitory transmitter GABA onto target cells in the striatum. Olfactory bulb (OB) short axon cells (SACs) form interglomerular connections and coexpress markers for DA and GABA. Using an optogenetic approach, we provide evidence that mouse OB SACs release both GABA and DA onto external tufted cells (ETCs) in other glomeruli. Optical activation of channelrhodopsin specifically expressed in DAergic SACs produced a GABA(A) receptor-mediated monosynaptic inhibitory response, followed by DA-D(1)-like receptor-mediated excitatory response in ETCs. The GABA(A) receptor-mediated hyperpolarization activates I(h) current in ETCs; synaptically released DA increases I(h), which enhances postinhibitory rebound spiking. Thus, the opposing actions of synaptically released GABA and DA are functionally integrated by I(h) to generate an inhibition-to-excitation "switch" in ETCs. Consistent with the established role of I(h) in ETC burst firing, we show that endogenous DA release increases ETC spontaneous bursting frequency. ETCs transmit sensory signals to mitral/tufted output neurons and drive intraglomerular inhibition to shape glomerulus output to downstream olfactory networks. GABA and DA cotransmission from SACs to ETCs may play a key role in regulating output coding across the glomerular array.