The ability to localize sound rapidly and accurately depends on the precise organization of inhibitory neuronal circuits in the auditory brainstem. However, the rules and mechanisms by which this precision is established during development are still poorly understood. Although activity-dependent reorganization has been known for over a decade to have a central role in this process, more recent studies have revealed an unanticipated degree of reorganization that occurs on levels ranging from cellular phenotype to network connectivity. These results suggest novel mechanisms by which immature inhibitory sound-localization circuits become optimized. Lessons from auditory brainstem circuits thus could provide insight into inhibitory development in other brain areas, where inhibitory networks are less experimentally accessible.