Expectations can influence perception in seemingly contradictory ways, either by directing attention to expected stimuli and enhancing perceptual acuity or by stabilizing perception and diminishing acuity within expected stimulus categories. The neural mechanisms supporting these dual roles of expectation are not well understood. Here, we trained European starlings to classify ambiguous song syllables in both expected and unexpected acoustic contexts. We show that birds employ probabilistic, Bayesian integration to classify syllables, leveraging their expectations to stabilize their perceptual behavior. However, auditory sensory neural populations do not reflect this integration. Instead, expectation enhances the acuity of auditory sensory neurons in high-probability regions of the stimulus space. This modulation diverges from patterns typically observed in motor areas, where Bayesian integration of sensory inputs and expectations predominates. Our results suggest that peripheral sensory systems use expectation to improve sensory representations and maintain high-fidelity representations of the world, allowing downstream circuits to flexibly integrate this information with expectations to drive behavior.