This thesis focuses on several aspects of olfactory processing in Drosophila. In chapter I and II, I will discuss how odorants are encoded in the brain. In both insects and mammals, olfactory receptor neurons (ORNs) expressing the same odorant receptor gene converge onto the same glomerulus. This topographical organization segregates incoming odor information into combinatorial maps. One prominent theory suggests that insects and mammals discriminate odors based on these distinct combinatorial spatial codes. I tested the combinatorial coding hypothesis by engineering flies that have only one class of functional ORNs and therefore cannot support combinatorial maps. These files can be taught to discriminate between two odorants that activate the single functional class of ORN and identify an odorant across a range of concentrations, demonstrating that a combinatorial code is not required to support learned odor discrimination. In addition, these data suggest that odorant identity can be encoded as temporal patterns of ORN activity. Behaviors are influenced by motivational states of the animal. Chapter III of this thesis focuses on understanding how motivational states control behavior. Appetitive memory in Drosophilaprovides an excellent system for such studies because the motivational state of hunger promotes reliance on learned appetitive cues whereas satiety suppresses it. We found that activation of neuropeptide F (dNPF) neurons in fed flies releases appetitive memory performance from satiety-mediated suppression. Through a GAL4 screen, we identified six dopaminergic neurons that are a substrate for dNPF regulation. In satiated flies, these neurons inhibit mushroom body output, thereby suppressing appetitive memory performance. Hunger promotes dNPF release, which blocks the inhibitory dopaminergic neurons. The motivational drive of hunger thus affects behavior through a hierarchical inhibitory control mechanism: satiety inhibits memory performance through a subset of dopaminergic neurons, and hunger promotes appetitive memory retrieval via dNPF-mediated disinhibition of these neurons. The aforementioned studies utilize sophisticated genetic tools for Drosophila. In chapter IV, I will talk about two new genetic tools. We developed a new technique to restrict gene expression to different subsets of mushroom body neurons with unprecedented precision. We also adapted the light-activated adenylyl cyclase (PAC) from Euglena gracilis as a light-inducable cAMP system for Drosophila. This system can be used to induce cAMP synthesis in targeted neurons in live, behaving preparations.