Throughout the central nervous system, the timescale over which pairs of neural spike trains are correlated is shaped by stimulus structure and behavioral context. Such shaping is thought to underlie important changes in the neural code, but the neural circuitry responsible is largely unknown. In this study, we investigate a stimulus-induced shaping of pairwise spike train correlations in the electrosensory system of weakly electric fish. Simultaneous single unit recordings of principal electrosensory cells show that an increase in the spatial extent of stimuli increases correlations at short ([Formula: see text]) timescales while simultaneously reducing correlations at long ([Formula: see text]) timescales. A spiking network model of the first two stages of electrosensory processing replicates this correlation shaping, under the assumptions that spatially broad stimuli both saturate feedforward afferent input and recruit an open-loop inhibitory feedback pathway. Our model predictions are experimentally verified using both the natural heterogeneity of the electrosensory system and pharmacological blockade of descending feedback projections. For weak stimuli, linear response analysis of the spiking network shows that the reduction of long timescale correlation for spatially broad stimuli is similar to correlation cancellation mechanisms previously suggested to be operative in mammalian cortex. The mechanism for correlation shaping supports population-level filtering of irrelevant distractor stimuli, thereby enhancing the population response to relevant prey and conspecific communication inputs.