Dopamine modulation of nucleus accumbens (NAc) circuitry is central to theories of reward seeking and reinforcement learning. Despite decades of effort, the acute dopamine actions on the NAc microcircuitry remain puzzling. Here, we dissect out the direct actions of dopamine on lateral inhibition between medium spiny neurons (MSNs) in mouse brain slices and find that they are pathway specific. Dopamine potently depresses GABAergic transmission from presynaptic dopamine D2 receptor-expressing MSNs (D2-MSNs), whereas it potentiates transmission from presynaptic dopamine D1 receptor-expressing MSNs (D1-MSNs) onto other D1-MSNs. To our surprise, presynaptic D2 receptors mediate only half of the depression induced by endogenous and exogenous dopamine. Presynaptic serotonin 5-HT1B receptors are responsible for a significant component of dopamine-induced synaptic depression. This study clarifies the mechanistic understanding of dopamine actions in the NAc by showing pathway-specific modulation of lateral inhibition and involvement of D2 and 5-HT1B receptors in dopamine depression of D2-MSN synapses.