Inhibition occurs throughout the nervous system and impacts diverse neuronal processes. In this dissertation, I focus on an inhibitory circuit motif in the Drosophila olfactory system, parallel inhibition, which differs from the classical feed-forward or feedback inhibition. The Drosophila excitatory and GABAergic inhibitory projection neurons (ePNs and iPNs) each receive input from antennal lobe glomeruli and send parallel output to the lateral horn, a higher-order brain center implicated in regulating innate olfactory behavior. By incorporating in vivo two-photon calcium imaging, advanced fly genetics and optogenetic methods to manipulate and record neuronal activity, we find that iPNs selectively suppress food-related odorant responses but spare signals from pheromone channel stimulation when using specific lateral horn neurons as an olfactory readout. Co-applying food odorant does not affect pheromone signal transmission, suggesting that the differential effects likely result from connection specificity of iPNs, rather than a generalized inhibitory tone. Calcium responses in the ePN axon terminals show no detectable suppression by iPNs, arguing against presynaptic inhibition as a primary mechanism. The parallel inhibition motif may provide specificity in inhibition to funnel specific olfactory information, such as food and pheromone, into distinct downstream circuits.