Sensing olfactory signals in the environment represents a crucial and significant task of sensory systems in almost all organisms to facilitate survival and reproduction. Notably, the olfactory system of diverse animal phyla shares astonishingly many fundamental principles with regard to anatomical and functional properties. Binding of odor ligands by chemosensory receptors present in the olfactory peripheral organs leads to a neuronal activity that is conveyed to first and higher-order brain centers leading to a subsequent odor-guided behavioral decision. One of the key centers for integrating and processing innate olfactory behavior is the lateral horn (LH) of the protocerebrum in insects. In recent years the LH of Drosophila has garnered increasing attention and many studies have been dedicated to elucidate its circuitry. In this review we will summarize the recent advances in mapping and characterizing LH-specific cell types, their functional properties with respect to odor tuning, their neurotransmitter profiles, their connectivity to pre-synaptic and post-synaptic partner neurons as well as their impact for olfactory behavior as known so far.