Inhibitory local interneurons (LNs) play a critical role in shaping the output of olfactory glomeruli in both the olfactory bulb of vertebrates and the antennal lobe of insects and other invertebrates. In order to examine how the complex geometry of LNs may affect signaling in the antennal lobe, we constructed detailed multi-compartmental models of single LNs from the sphinx moth, Manduca sexta, using morphometric data from confocal-microscopic images. Simulations clearly revealed a directionality in LNs that impeded the propagation of injected currents from the sub-micron-diameter glomerular dendrites toward the much larger-diameter integrating segment (IS) in the coarse neuropil. Furthermore, the addition of randomly-firing synapses distributed across the LN dendrites (simulating the noisy baseline activity of afferent input recorded from LNs in the odor-free state) led to a significant depolarization of the LN. Thus the background activity typically recorded from LNs in vivo could influence synaptic integration and spike transformation in LNs through voltage-dependent mechanisms. Other model manipulations showed that active currents inserted into the IS can help synchronize the activation of inhibitory synapses in glomeruli across the antennal lobe. These data, therefore, support experimental findings suggesting that spiking inhibitory LNs can operate as multifunctional units under different ambient odor conditions. At low odor intensities, (i.e. subthreshold for IS spiking), they participate in local, mostly intra-glomerular processing. When activated by elevated odor concentrations, however, the same neurons will fire overshooting action potentials, resulting in the spread of inhibition more globally across the antennal lobe. Modulation of the passive and active properties of LNs may, therefore, be a deciding factor in defining the multi-glomerular representations of odors in the brain.