The apical dendrites of pyramidal neurons, the principal cortical neuronal cell type, have non-linear active properties which can dominate the integrative process and control axonal output. However, their inaccessibility has prevented studies into how dendritic activity relates to spike output in behaving animals. Complex dendritic spikes have been observed in vivo in response to sensory stimuli. On the other hand, inhibition, which always accompanies sensory stimuli, is also thought to play an important role in the encoding of dendritic activity. Understanding how the excitatory and inhibitory mechanisms specific to the dendrite shape the integrative process is an extremely challenging task at present. Here we present a fiberoptic approach to recording from populations of layer 5 pyramidal dendrites that can be easily implemented in anesthetized and freely moving animals. The animals were prepared under anaesthesia for the placement of the recording device; this was attached, under anaesthesia, on the day of the experiment. The first results using this method in rats show that the strength of sensory stimuli is linearly encoded across a population of pyramidal cell dendrites. This was true both in rats anesthetized with isofluorane or urethane and in the freely moving, awake state. Using various pharmacological interventions including localized injections at depths corresponding to layer 5, we were able to show that the linearity of the sensory encoding was dependent on specific inhibitory microcircuitry. This circuitry involved dendrite-targeting Martinotti cells in deep cortical layers which were activated via disynaptic coupling with neighbouring pyramidal neurons. By examining the same circuitry in vitro, we showed that the effect of this loop was very powerful such that even one pyramidal neuron could evoke enough disynaptic inhibition to block dendritic calcium spikes. The mechanism in the intact brain acts as a form of feedback inhibition controlling the gain and dynamic-range of the dendritic responses to sensory stimuli.