Although all sensory circuits ascend to higher brain areas where stimuli are represented in sparse, stimulus-specific activity patterns, relatively little is known about sensory coding on the descending side of neural circuits, as a network converges. In insects, mushroom bodies have been an important model system for studying sparse coding in the olfactory system, where this format is important for accurate memory formation. In Drosophila, it has recently been shown that the 2,000 Kenyon cells of the mushroom body converge onto a population of only 34 mushroom body output neurons (MBONs), which fall into 21 anatomically distinct cell types. Here we provide the first, to our knowledge, comprehensive view of olfactory representations at the fourth layer of the circuit, where we find a clear transition in the principles of sensory coding. We show that MBON tuning curves are highly correlated with one another. This is in sharp contrast to the process of progressive decorrelation of tuning in the earlier layers of the circuit. Instead, at the population level, odour representations are reformatted so that positive and negative correlations arise between representations of different odours. At the single-cell level, we show that uniquely identifiable MBONs display profoundly different tuning across different animals, but that tuning of the same neuron across the two hemispheres of an individual fly was nearly identical. Thus, individualized coordination of tuning arises at this level of the olfactory circuit. Furthermore, we find that this individualization is an active process that requires a learning-related gene, rutabaga. Ultimately, neural circuits have to flexibly map highly stimulus-specific information in sparse layers onto a limited number of different motor outputs. The reformatting of sensory representations we observe here may mark the beginning of this sensory-motor transition in the olfactory system.