Tonic inhibition is a key regulator of neuronal excitability and network function in the brain, but its role in sensory information processing remains poorly understood. The cerebellum is a favorable model system for addressing this question as granule cells, which form the input layer of the cerebellar cortex, permit high-resolution patch-clamp recordings in vivo, and are the only neurons in the cerebellar cortex that express the α6δ-containing GABA A receptors mediating tonic inhibition. We investigated how tonic inhibition regulates sensory information transmission in the rat cerebellum by using a combination of intracellular recordings from granule cells and molecular layer interneurons in vivo, selective pharmacology, and in vitro dynamic clamp experiments. We show that blocking tonic inhibition significantly increases the spontaneous firing rate of granule cells while only moderately increasing sensory-evoked spike output. In contrast, enhancing tonic inhibition reduces the spike probability in response to sensory stimulation with minimal effect on the spontaneous spike rate. Both manipulations result in a reduction in the signal-to-noise ratio of sensory transmission in granule cells and of parallel fiber synaptic input to downstream molecular layer interneurons. These results suggest that under basal conditions the level of tonic inhibition in vivo enhances the fidelity of sensory information transmission through the input layer of the cerebellar cortex.