Prepulse inhibition (PPI) is typically associated with an attenuation of auditory startle behavior in mammals and is presumably mediated within the brainstem startle circuit. However, the cellular mechanisms underlying PPI are not yet clear. We addressed this question in behavioral and complementary in vivo electrophysiological experiments in the startle escape circuit of goldfish, the Mauthner cell (M-cell) system. In the behavioral experiments we observed a 77.5 % attenuation (PPI) of startle escape probability following an auditory prepulse. The PPI effect was similar for prepulse-pulse interstimulus intervals (ISIs) ranging from 20-600 ms, and its magnitude depended linearly on prepulse intensity over a range of 14 dB. Electrophysiological recordings of synaptic responses to a sound pulse in the M-cell, which is the sensorimotor neuron initiating startle escapes, showed a 21 % amplitude reduction of the dendritic PSP and a 23 % reduction of the somatic PSP following a prepulse. In addition, a prepulse evoked a long lasting (500 ms) decrease in M-cell excitability indicated by (i) an increased threshold current, (ii) an inhibitory shunt of the action potential (AP), and (iii) by diminishing the depolarizing effect of a newly described M-cell membrane non-linearity. Comparing the magnitude and kinetics of inhibitory shunts evoked by a prepulse in the M-cell dendrite and soma revealed a disproportionately larger and longer-lasting inhibitory shunt in the dendrite. Taken together, these results suggest that the observed PPI-type attenuation of startle behavior can be correlated to distinct postsynaptic mechanisms mediated primarily at the M-cell lateral dendrite.