Circuits of the antennal lobe, the insect equivalent of the olfactory bulb, translate input from olfactory receptor neurons (ORNs) into projection neuron (PN) output. Synaptic connections between ORNs and PNs are one-to-one, yet PNs are more broadly tuned to odors than ORNs. Functional optical imaging of a Drosophila mutant lacking ORN input to one glomerulus indicates that activity in a previously unidentified population of cholinergic local neurons (LNs) is the likely mechanism underlying the extended receptive range of PNs. Excitatory LNs densely innervate the antennal lobes with multiglomerular processes and respond broadly to odors, but they exhibit little glomerular specificity in their synaptic output, suggesting that PNs are driven by a combination of glomerulus-specific ORN afferents and diffuse LN excitation. Lateral excitation may boost PN signals and enhance their transmission to third-order neurons in a mechanism akin to stochastic resonance.