Endocannabinoids (ECs) act as retrograde messengers that enable postsynaptic cells to regulate the strength of their synaptic inputs. Here, by using physiological and histological techniques, we showed that, unlike in other parts of the brain, excitatory inputs are more sensitive than inhibitory inputs to EC signaling in the dorsal cochlear nucleus (DCN), an auditory brainstem nucleus. The principal cells of the DCN, fusiform cells, integrate acoustic signals through nonplastic synapses located in the deep layer with multimodal sensory signals carried by plastic parallel fibers in the molecular layer. Parallel fibers contact fusiform cells and inhibitory interneurons, the cartwheel cells, which in turn inhibit fusiform cells. Postsynaptic depolarization or pairing of postsynaptic potentials (PSPs) with action potentials (APs) induced EC-mediated modulation of excitatory inputs but did not affect inhibitory inputs. Quantitative electron microscopical studies showed that glutamatergic terminals express more cannabinoid 1 receptors (CB1Rs) than glycinergic terminals. Fusiform and cartwheel cells express diacylglycerol lipase alpha and beta (DGLalpha/beta), the two enzymes involved in the generation of the EC, 2-arachidonoyl-glycerol (2-AG). DGLalpha and DGLbeta are found in the spines of cartwheel but not fusiform cells indicating that the synthesis of ECs is more distant from parallel fiber synapses in fusiform than cartwheel cells. The differential localization and density of DGLalpha/beta and CB1Rs leads to cell- and input-specific EC signaling that favors activity-dependent EC-mediated suppression at synapses between parallel fibers and cartwheel cell spines, thus leading to reduced feedforward inhibition in fusiform cells. We propose that EC signaling is a major modulator of the balance of excitation and inhibition in auditory circuits.