We show that information flow through the adult cerebellar cortex, from the mossy fiber input to the Purkinje cell output, is controlled by furosemide-sensitive, diazepam- and neurosteroid-insensitive GABAA receptors on granule cells, which are activated both tonically and by GABA spillover from synaptic release sites. Tonic activation of these receptors contributes a 3-fold larger mean inhibitory conductance than GABA released synaptically by high-frequency stimulation. Tonic and spillover inhibition reduce the fraction of granule cells activated by mossy fiber input, generating an increase of coding sparseness, which is predicted to improve the information storage capacity of the cerebellum.