Stimulus novelty modifies perception and promotes exploration and learning. What are the neural circuit mechanisms that underlie the effects of novelty? To address this question, we trained mice on a visual change detection task, while we performed two-photon calcium imaging of neural activity from excitatory and inhibitory (VIP and SST) neuron classes across multiple layers of the visual cortex (areas V1 and LM; 82 mice, 551 sessions, 34,619 neurons). The behavioral task required detecting image changes that occurred amid repeated image presentations. Additionally, flashed images were periodically (5%) omitted, thereby allowing the study of expectation violation signals.To study how novelty modulates the neural encoding of sensory and behavioral events, mice experienced two image sets across sessions: one familiar set that was used during training, and another novel set that mice had never seen before. Using population decoding, regression and clustering techniques we reveal cell-type specific changes in neural activity as a result of stimulus novelty that unfold on multiple timescales: novelty exerts rapid and transient changes in the visual responses of SST and particularly VIP neurons, in contrast to excitatory neurons. Additionally, we studied functional diversity within each cell class as a result of exposure to novelty. Individual VIP neurons encode a variety of features; while excitatory or SST neurons tend to be less multiplexed in their coding properties. Together, our results reveal functional roles for different neuron cell classes, providing a new model of microcircuitry between excitatory and inhibitory neurons. Overall, VIP activity in response to novelty is consistent with a role in gating plasticity in excitatory neurons, allowing the brain to update its predictions about the external world. Moreover, the distinct functional clusters indicate that novelty defines new microcircuits of excitatory and inhibitory neurons, which contrast the classical disinhibitory microcircuitry.