To date, most physiological studies that investigated binaural auditory processing have addressed the topic rather exclusively in the context of sound localization. However, there is strong psychophysical evidence that binaural processing serves more than only sound localization. This raises the question of how binaural processing of spatial cues interacts with cues important for feature detection. The temporal structure of a sound is one such feature important for sound recognition. As a first approach, we investigated the influence of binaural cues on temporal processing in the mammalian auditory system. Here, we present evidence that binaural cues, namely interaural intensity differences (IIDs), have profound effects on filter properties for stimulus periodicity of auditory midbrain neurons in the echolocating big brown bat, Eptesicus fuscus. Our data indicate that these effects are partially due to changes in strength and timing of binaural inhibitory inputs. We measured filter characteristics for the periodicity (modulation frequency) of sinusoidally frequency modulated sounds (SFM) under different binaural conditions. As criteria, we used 50% filter cutoff frequencies of modulation transfer functions based on discharge rate as well as synchronicity of discharge to the sound envelope. The binaural conditions were contralateral stimulation only, equal stimulation at both ears (IID = 0 dB), and more intense at the ipsilateral ear (IID = -20, -30 dB). In 32% of neurons, the range of modulation frequencies the neurons responded to changed considerably comparing monaural and binaural (IID =0) stimulation. Moreover, in approximately 50% of neurons the range of modulation frequencies was narrower when the ipsilateral ear was favored (IID = -20) compared with equal stimulation at both ears (IID = 0). In approximately 10% of the neurons synchronization differed when comparing different binaural cues. Blockade of the GABAergic or glycinergic inputs to the cells recorded from revealed that inhibitory inputs were at least partially responsible for the observed changes in SFM filtering. In 25% of the neurons, drug application abolished those changes. Experiments using electronically introduced interaural time differences showed that the strength of ipsilaterally evoked inhibition increased with increasing modulation frequencies in one third of the cells tested. Thus glycinergic and GABAergic inhibition is at least one source responsible for the observed interdependence of temporal structure of a sound and spatial cues.