In mammals with good low-frequency hearing and a moderate to large interear distance, neurons in the medial superior olive (MSO) are sensitive to interaural time differences (ITDs). Most small mammals, however, do not hear low frequencies and do not experience significant ITDs, suggesting that their MSOs participate in functions other than ITD coding. In one bat species, the mustached bat, the MSO is a functionally monaural nucleus, acting as a low-pass filter for the rate of sinusoidally amplitude-modulated (SAM) stimuli. We investigated whether the more typical binaural MSO of the MExican free-tailed bat also acts as an SAM filter. We recorded from 60 MSO neurons with their best frequencies covering the entire audiogram of this bat. The majority revealed bilateral excitation and indirect evidence for inhibition (EI/EI; 55%). The remaining neurons exhibited reduced inputs, mostly lacking ipsilateral inputs (28% I/EI; 12% O/EI; 5% EI/O). Most neurons (64%) responded with a phasic discharge to pure tones; the remaining neurons exhibited an additional sustained component. For stimulation with pure tones, two thirds of the cells exhibited monotonic rate-level functions for ipsilateral, contralateral, or binaural stimulation. In contrast, nearly all neurons exhibited nonmonotonic rate-level functions when tested with SAM stimuli. Eighty-eight percent of the neurons responded with a phase-locked discharge to SAM stimuli at low modulation rates and exhibited low-pass filter characteristics in the modulation transfer function (MTF) for ipsilateral, contralateral, and binaural stimulation. The MTF for ipsilateral stimulation usually did not match that for contralateral stimulation. Introducing interaural intensity differences (IIDs) changed the MTF in unpredictable ways. We also found that responses to SAMs depended on the carrier frequency. In some neurons we measured the time course of the ipsilaterally and contralaterally evoked inhibition by presenting brief frequency-modulated sweeps at different ITDs. The duration and timing of inhibition could be related to the SAM cutoff for binaural stimulation. We conclude that the response of the MSO in the free-tailed bat is created by a complex interaction of inhibition and excitation. The different time constants of inputs create a low-pass filter for SAM stimuli. However, the MSO output is an integrated response to the temporal structure of a stimulus as well as its azimuthal position, i.e., IIDs. There are no in vivo results concerning filter characteristics in a "classical" MSO, but our data confirm an earlier speculation about this interdependence based on data accessed from a gerbil brain slice preparation.