A brainstem circuit for encoding the spatial location of sounds involves neurons in the cochlear nucleus that project to medial superior olivary (MSO) neurons on both sides of the brain via a single bifurcating axon. Neurons in MSO act as coincidence detectors, responding optimally when signals from the two ears arrive within a few microseconds. To achieve this, transmission of signals along the contralateral collateral must be faster than transmission of the same signals along the ipsilateral collateral. We demonstrate that this is achieved by differential regulation of myelination and axon caliber along the ipsilateral and contralateral branches of single axons; ipsilateral axon branches have shorter internode lengths and smaller caliber than contralateral branches. The myelination difference is established prior to the onset of hearing. We conclude that this differential myelination and axon caliber requires local interactions between axon collaterals and surrounding oligodendrocytes on the two sides of the brainstem. GLIA 2016;64:487–494