Cortical microcircuit research has been revolutionized by the development of advanced tools that enable the specific labeling and manipulation of genetically identified subpopulations of neurons. One such subpopulation is the group of neocortical interneurons expressing both vasoactive intestinal polypeptide (VIP) and choline acetyltransferase (ChAT). These interneurons are sparsely distributed throughout the neocortex, constituting only 0.5% of its neuronal population. The co-expression of VIP and ChAT suggests that these VIP/ChAT interneurons (VChIs) can release both γ-aminobutyric acid (GABA) and acetylcholine (ACh). The function of VChIs, in vivo, is not known. To study the role of VChIs in cortical network dynamics and their long-range connectivity pattern, we used in vivo electrophysiology and rabies virus tracing in the barrel cortex of mice. We found that VChIs have a low spontaneous spiking rate (~1 spike/s) in the barrel cortex but they respond with higher fidelity to whisker stimulation. Analysis of long-range inputs to VChIs with monosynaptic rabies virus tracing revealed that direct thalamic projections are a significant input source to these cells. Optogenetic activation of VChIs in the barrel cortex suppressed the sensory responses of excitatory neurons while increasing the evoked spike latency. Our findings demonstrate that, despite their sparsity, VChIs can effectively modulate sensory processing in the cortical microcircuit.