In schizophrenia, cognitive overload is thought to reflect an inability to suppress non-salient information, a process which is studied using prepulse inhibition of the startle response. Prepulse inhibition is reduced in schizophrenia and routinely tested in animal models and pre-clinical trials of antipsychotic drugs. However the underlying neuronal circuitry is not well understood. We used a novel genetic screen in larval zebrafish to reveal the molecular identity of neurons that are required for prepulse inhibition in fish and mice. Ablation or optogenetic silencing of neurons with developmental expression of the transcription factor Gsx1 produced profound defects in prepulse inhibition in zebrafish, and prepulse inhibition was similarly impaired in Gsx1 knockout mice. Gsx1 expressing neurons reside in the dorsal brainstem and form synapses closely apposed to neurons which initiate the startle response. Surprisingly brainstem Gsx1 neurons are primarily glutamatergic despite their role in a functionally inhibitory pathway. As Gsx1 plays an important role in regulating interneuron development in the forebrain, these findings reveal a molecular link between control of interneuron specification and circuits which gate sensory information across brain regions.