In nature, virtually all olfactory stimuli are mixtures of many single odorants. Behavioral experiments repeatedly have demonstrated that an animal's olfactory system is capable of discriminating behaviorally relevant from irrelevant odor mixtures. However, the sensory mechanisms that underlie such discriminative capability remain elusive. The limited anatomical and physiological evidence collected from both insect and vertebrate models that pertains to this topic is scattered in the literature dating back to early 1980s. Thus, a synthesis of this information that includes more recent findings is needed in order to provide a basis for probing the fundamental question from a new angle. In this review, we discuss several proposed models for mixture processing, along with experimental data gathered from both the initial stage of olfactory processing (i.e., antennal lobe in insects or olfactory bulb in vertebrates) and higher areas of the brain, with an emphasis on how the lateral circuits in the antennal lobe or olfactory bulb may contribute to mixture processing. Based on empirical data as well as theoretical modeling, we conclude that odor mixtures may be represented both at the single-neuron level and at the population level. The difference between these two types of processing may reside in the degree of plasticity, with the former being hard-wired and the latter being more subjected to network modulation.