Neurons in the nucleus laminaris (NL) of birds detect the coincidence of binaural excitatory inputs from the nucleus magnocellularis (NM) on both sides and process the interaural time differences (ITDs) for sound localization. Sustained inhibition from the superior olivary nucleus is known to control the gain of coincidence detection, which allows the sensitivity of NL neurons to ITD tolerate strong-intensity sound. Here, we found a phasic inhibition in chicken brain slices that follows the ipsilateralNMinputs after a short time delay, sharpens coincidence detection, and may enhance ITD sensitivity in low-frequency NL neurons. GABA-positive small neurons are distributed in and near the NL. These neurons generate IPSCs in NL neurons when photoactivated by a caged glutamate compound, suggesting that these GABAergic neurons are interneurons that mediate phasic inhibition. These IPSCs have fast decay kinetics that is attributable to the alpha 1-subunit of the GABA(A) receptor, the expression of which dominates in the low-frequency region of the NL. Model simulations demonstrate that phasic IPSCs narrow the time window of coincidence detection and increase the contrast of ITD-tuning during low-level, low-frequency excitatory input. Furthermore, cooperation of the phasic and sustained inhibitions effectively increases the contrast of ITD-tuning over a wide range of excitatory input levels. We propose that the complementary interaction between phasic and sustained inhibitions is the neural mechanism that regulates ITD sensitivity for low-frequency sound in the NL.