Abstract In the olfactory system, the olfactory cortex sends glutamatergic projections back to the first stage of olfactory processing, the olfactory bulb (OB). Such corticofugal excitatory circuits — a canonical circuit motif described in all sensory systems— dynamically adjust early sensory processing. Here, we uncover a corticofugal inhibitory feedback to OB, originating from a subpopulation of GABAergic neurons in the anterior olfactory cortex and innervating both local and output OB neurons. In vivo imaging and network modeling showed that optogenetic activation of cortical GABAergic projections drives a net subtractive inhibition of both spontaneous and odor-evoked activity in local as well as output neurons. In output neurons, stimulation of cortical GABAergic feedback enhances separation of population odor responses in tufted cells, but not mitral cells. Targeted pharmacogenetic silencing of cortical GABAergic axon terminals impaired discrimination of similar odor mixtures. Thus, corticofugal GABAergic projections represent an additional circuit motif in cortical feedback control of sensory processing.