Olfactory information is encoded in lateral entorhinal cortex (LEC) by two classes of layer 2 (L2) principal neurons: fan and pyramidal cells. However, the functional properties of L2 cells and how they contribute to odor coding are unclear. Here, we show in awake mice that L2 cells respond to odors early during single sniffs and that LEC is essential for rapid discrimination of both odor identity and intensity. Population analyses of L2 ensembles reveal that rate coding distinguishes odor identity, but firing rates are only weakly concentration dependent and changes in spike timing can represent odor intensity. L2 principal cells differ in afferent olfactory input and connectivity with inhibitory circuits and the relative timing of pyramidal and fan cell spikes provides a temporal code for odor intensity. Downstream, intensity is encoded purely by spike timing in hippocampal CA1. Together, these results reveal the unique processing of odor information by LEC subcircuits and highlight the importance of temporal coding in higher olfactory areas.