Retrograde synaptic signaling has long been recognized as a fundamental feature of neural systems. However, the cellular specificity and functional consequences of fast retrograde communication are not well understood. We have focused our efforts on understanding the role that endocannabinoids play in regulating synaptic inhibition in sensory neocortex. Recent studies have implicated endocannabinoids as the retrograde signaling molecules that underlie depolarization-induced suppression of inhibition, or DSI. This short-term form of presynaptic depression is triggered by postsynaptic depolarization and likely plays an important role in information processing. In the present study we investigated the cellular and synaptic specificity of endocannabinoid signaling in sensory cortex using whole-cell recordings from layer 2/3 pyramidal neurons (PNs) in acute brain slices. We report that GABAergic interneurons that are depolarized by muscarinic receptor stimulation provided the majority of DSI-susceptible inputs to neocortical PNs. This subclass of interneurons generated large, fast postsynaptic currents in PNs which were transiently suppressed by either postsynaptic depolarization or a brief train of action potentials. Neocortical DSI required activation of the type 1 cannabinoid receptor (CB1R) but not metabotropic glutamate or GABA receptors. Using focal drug application, we found that the DSI-susceptible afferents preferentially synapse on the perisomatic membrane of PNs, and not on the apical dendrites. Together, these results suggest that endocannabinoid-mediated DSI in the cortex can transiently and selectively depress a subclass of PN inputs. Although the physiological implications remain to be explored, this suppression of somatic inhibition may alter the excitability of principal neurons and thereby modulate cortical output.