The ability to discriminate different sensory patterns by disentangling their neural representations is an important property of neural networks. While a variety of learning rules are known to be highly effective at fine-tuning synapses to achieve this, less is known about how different cell types in the brain can facilitate this process by providing architectural priors that bias the network towards sparse, selective, and discriminable representations. We studied this by simulating a neuronal network modelled on the dentate gyrus—an area characterised by sparse activity associated with pattern separation in spatial memory tasks. To test the contribution of different cell types to these functions, we presented the model with a wide dynamic range of input patterns and systematically added or removed different circuit elements. We found that recruiting feedback inhibition indirectly via recurrent excitatory neurons proved particularly helpful in disentangling patterns, and show that simple alignment principles for excitatory and inhibitory connections are a highly effective strategy.