The olfactory system of the fruit fly Drosophila melanogaster is an invaluable model for understanding circuit function. Composed mainly of olfactory receptor neurons (ORNs), projection neurons (PNs), and local interneurons (LNs), it is an analogous structure to mammalian olfactory systems. Of these cell types, LNs are particularly intriguing. These neurons are found in a variety of morphologies and with differing neurotransmitter and receptor profiles. Given their heterogeneity, it is critical to gain an understanding of their roles in olfactory circuits. In this work, I probe the physiology and functions of two unique subpopulations of LNs in the antennal lobe (AL). In the first population, I demonstrate LNs which respond to extrasynaptic, paracrine levels of serotonergic modulation. These LNs then engage in postsynaptic inhibition and subtractive gain control, which is contrary to typical LNs. The second population I characterize are previously undescribed nonspiking LNs in the fly AL. Nonspiking cells are common to insect olfaction as well as other sensory pathways in vertebrates. I find that these neurons are likely to be electrotonically compartmentalized, such that activation within individual regions does not propagate across the whole cell, suggesting roles in previously unexplained mechanisms such as intraglomerular inhibition. The results of this work suggest more heterogeneity in Drosophila LNs than previously assumed and cements the importance of interneuron contribution to neuronal function.