Neurons in the medial superior olive (MSO) detect microsecond differences in the arrival time of sounds between the ears (interaural time differences or ITDs), a crucial binaural cue for sound localization. Synaptic inhibition has been implicated in tuning ITD sensitivity, but the cellular mechanisms underlying its influence on coincidence detection are debated. Here we determine the impact of inhibition on coincidence detection in adult Mongolian gerbil MSO brain slices by testing precise temporal integration of measured synaptic responses using conductance-clamp. We find that inhibition dynamically shifts the peak timing of excitation, depending on its relative arrival time, which in turn modulates the timing of best coincidence detection. Inhibitory control of coincidence detection timing is consistent with the diversity of ITD functions observed in vivo and is robust under physiologically relevant conditions. Our results provide strong evidence that temporal interactions between excitation and inhibition on microsecond timescales are critical for binaural processing.