Anesthetics may induce specific changes that alter the balance of activity within neural networks. Here we describe the effects of the GABA_A-receptor potentiating anesthetic etomidate on sensory processing, studied in a cerebellum-like structure, the electrosensory lateral line lobe (ELL) of mormyrid fish, in vitro. Previous studies have shown that the ELL integrates sensory input and removes predictable features by comparing reafferent sensory signals with a descending electromotor command-driven corollary signal that arrives in part via parallel fiber synapses with the apical dendrites of GABAergic interneurons. These synapses show spike timing dependent depression when presynaptic activation is associated with postsynaptic backpropagating dendritic action potentials. Under etomidate almost all neurons become tonically hyperpolarized. The threshold for action potential initiation increased for both synaptic activation and direct intracellular depolarization. Synaptically-evoked IPSPs were also strongly potentiated and prolonged. Current source density analysis showed that backpropagation of action potentials through the apical dendritic arborization in the molecular layer was reduced, but could be restored by increasing stimulus strength. These effects of etomidate were blocked by bicuculline or picrotoxin. It is concluded that etomidate affects both tonic and phasic inhibitory conductances at GABA_A receptors and that increased shunting inhibition at the level of the proximal dendrites also contributes to increasing the threshold for action potential backpropagation. When stimulus strength is sufficient to evoke backpropagation, repetitive association of synaptic excitation with postsynaptic action potential initiation still results in synaptic depression, showing that etomidate does not interfere with the molecular mechanism underlying plastic modulation.