Cortical interneurons expressing vasoactive intestinal polypeptide (VIP) and choline acetyltransferase (ChAT) 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). In vitro physiological studies quantified the response properties and local connectivity patterns of the VChIs; however, the function of VChIs has not been explored in vivo. 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 (approximately 1 spike/s) in the barrel cortex of anesthetized mice; nevertheless, they responded with higher fidelity to whisker stimulation than the neighboring layer 2/3 pyramidal neurons (Pyrs). 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 of awake mice suppresses the sensory responses of excitatory neurons in intermediate amplitudes of whisker deflections while increasing the evoked spike latency. The effect of VChI activation on the response was similar for both high-whisking (HW) and low-whisking (LW) conditions. Our findings demonstrate that, despite their sparsity, VChIs can effectively modulate sensory processing in the cortical microcircuit.