Evaluating odor blends in sensory processing is a crucial step for signal recognition and execution of behavioral decisions. Using behavioral assays and 2-photon imaging, we have characterized the neural and behavioral correlates of mixture perception in the olfactory system of Drosophila. Mixtures of odors with opposing valences elicit strong inhibition in certain attractant-responsive input channels. This inhibition correlates with reduced behavioral attraction. We demonstrate that defined subsets of GABAergic interneurons provide the neuronal substrate of this computation at pre- and postsynaptic loci via GABAB- and GABAA receptors, respectively. Intriguingly, manipulation of single input channels by silencing and optogenetic activation unveils a glomerulus-specific crosstalk between the attractant- and repellent-responsive circuits. This inhibitory interaction biases the behavioral output. Such a form of selective lateral inhibition represents a crucial neuronal mechanism in the processing of conflicting sensory information.