Contrast enhancement via lateral inhibitory circuits is a common mechanism in sensory systems. We here employ a computational model to show that, in addition to shaping experimentally observed molecular receptive fields in the olfactory bulb, functionally lateral inhibitory circuits can also mediate the elemental and configurational properties of odor mixture perception. To the extent that odor perception can be predicted by slow-timescale neural activation patterns in the olfactory bulb, and to the extent that interglomerular inhibitory projections map onto a space of odorant similarity, the model shows that these inhibitory processes in the olfactory bulb suffice to generate the behaviorally observed inverse relationship between two odorants' perceptual similarities and the perceptual similarities between either of these same odorants and their binary mixture.