The principal neurons of the striatum, the spiny projection neurons (SPNs), make inhibitory synaptic connections with each other via collaterals of their main axon, forming a local lateral inhibition network. Serotonin, acting via the 5-HT1B receptor, modulates neurotransmitter release from SPN terminals in striatal output nuclei, but the role of 5-HT1B receptors in lateral inhibition among SPNs in the striatum is unknown. Here, we report the effects of 5-HT1B receptor activation on lateral inhibition in the mouse striatum. Whole-cell recordings were made from SPNs in acute brain slices of either sex, while optogenetically activating presynaptic SPNs or fast-spiking interneurons (FSIs). Activation of 5-HT1B receptors significantly reduced the amplitude of IPSCs evoked by optical stimulation of both direct and indirect pathway SPNs. This reduction was blocked by application of a 5-HT1B receptor antagonist. Activation of 5-HT1B receptors did not reduce the amplitude of IPSCs evoked from FSIs. These results suggest a new role for serotonin as a modulator of lateral inhibition among striatal SPNs. The 5-HT1B receptor may, therefore, be a suitable target for future behavioral experiments investigating the currently unknown role of lateral inhibition in the function of the striatum.