Vasopressin (VP) cells in the rat olfactory bulb (OB) have unique features compared to other types of external tufted cells, with olfactory nerve input inhibiting them and added cholinergic neuromodulation enabling them to fire. However, how VP modulates bulbar synaptic transmission to facilitate social discrimination is still unclear. As first step, we recorded responses to olfactory nerve stimulation and their modulation by VP (1 µM) using electrophysiology as well as 2-photon population Ca2+ imaging in acute OB slices. We first investigated the excitatory middle tufted and mitral cells. In middle tufted cells, the amplitudes of ON-evoked excitatory postsynaptic potentials were significantly smaller in the VP condition compared to control and the frequency of spontaneous IPSCs was higher, whereas mitral cells showed divergent effects. Since VP is thought to cause mostly excitatory downstream effects, we hypothesized that VP increases the excitation of inhibitory interneurons, to then in turn inhibit excitatory neurons. We examined VP effects on olfactory nerve-evoked Ca2+ influx in glomerular layer and granule cell layer neurons. In juxtaglomerular cells, mean ∆F/F amplitudes were larger in the VP condition. In granule cells, there was no such increase. Accordingly, when we investigated input to granule cells at high resolution using 2-photon glutamate uncaging at reciprocal spines, evoked EPSPs were unchanged by VP. However, basal Ca2+-sensitive fluorescence levels increased, pointing towards a higher release probability. We conclude that VP modulates the excitation-inhibition balance in the OB in various ways, possibly enhancing the neural representation of conspecifics’ signature body odors.