For echolocation, many species of bats emit frequency-modulated (FM) sounds. When the central gray matter or reticular formation in the midbrain is electrically stimulated, these bats produce FM sounds similar to FM-orientation signals. The auditory system is excited by these emitted sounds, but the responses of auditory neurons in the midbrain are attenuated by a neural mechanism operating synchronously with vocalization. This neural attenuating mechanism is present between the auditory nerve and the inferior colliculus and may be a part of mechanisms for effective echo-detection. Among the various orientation sounds emitted by bats, FM sounds are the most suited for echo-ranging. In the lateral lemniscus, the majority of neurons show a very short recovery period, as well as frequent facilitation of their responses to a second tone pulse, so that these neurons are specialized for echo-detection and carry information necessary for echolocation. In the inferior colliculus, single neurons exhibit a broad spectrum of recovery cycles, so that these are probably able to scale echoes from different distances for the distance measurement. Neural-network models of a clock for echo-ranging are discussed. In the inferior colliculus and the auditory cortex, there exist neurons specialized for processing FM signals. For the excitation of these FM-specialized neurons, the direction, range, and speed of frequency sweep are important factors. The FM-specialized neurons always have a large inhibitory area and respond to FM sounds sweeping across this area. Although seemingly paradoxical, such properties are easily explained by neural-network models. Orientation sounds of several species of bats consist of constant frequency (CF) and FM components. Neurons specialized for the analysis of CF sounds have inhibitory areas on both sides of a very narrow excitatory area. The responses of the FM-specialized neurons to certain FM sounds in the presence of either FM or CF sounds are discussed in relation to the inhibitory area.