Gamma-oscillatory activity is ubiquitous across brain areas. Numerous studies and theoretical models have suggested that γ-synchrony is likely to enhance the transmission of sensory information in the brain. However, direct causal evidence is still lacking. Here we tested this hypothesis in the mouse olfactory system, where local GABAergic granule cells (GC) in the olfactory bulb shape mitral/tufted cell (MTC) excitatory output from the olfactory bulb. By optogenetically modulating GC activity, we successfully dissociated MTC γ-synchronization from MTC firing rates. Recording of odor responses in downstream piriform cortex neurons showed that increasing MTC γ-synchronization enhanced cortical neuron odor-evoked firing rates, reduced their response variability, and improved their odor ensemble representation. These gains occurred despite a reduction in MTC firing rates. Furthermore, reducing MTC γ-synchronization without changing the MTC firing rates, by suppressing GC activity, degraded piriform cortex odor-evoked responses. These findings provide causal evidence that increased γ-synchronization enhances the transmission of sensory information between two brain regions.