How cell-type-specific physiological properties shape neuronal functions in a circuit remains poorly understood. We addressed this issue in the Drosophila mushroom body (MB), a higher olfactory circuit, where neurons belonging to distinct glomeruli in the antennal lobe feed excitation to three types of intrinsic neurons, alpha/beta, alpha'/beta', and gamma Kenyon cells (KCs). Two-photon optogenetics and intracellular recording revealed that whereas glomerular inputs add similarly in all KCs, spikes were generated most readily in alpha'/beta' KCs. This cell type was also the most competent in recruiting GABAergic inhibition fed back by anterior paired lateral neuron, which responded to odors either locally within a lobe or globally across all lobes depending on the strength of stimuli. Notably, as predicted from these physiological properties, alpha'/beta' KCs had the highest odor detection speed, sensitivity, and discriminability. This enhanced discrimination required proper GABAergic inhibition. These results link cell-type-specific mechanisms and functions in the MB circuit.