Understanding the coding of sensory information under the temporal constraints of natural behavior is not yet well resolved. There is a growing consensus that spike timing or latency coding can maximally exploit the timing of neural events to make fast computing elements. and that such mechanisms are essential to information processing functions in the brain. The electric sense of mormyrid fish provides a convenient biological model where this coding scheme can be studied. The sensory input is a physically ordered spatial pattern of current densities, which is coded in the precise timing of primary afferent spikes. The neural circuits of the processing pathway are well known and the system exhibits the best known illustration of corollary discharge, which provides the reference to decoding. the sensory afferent latency pattern. A theoretical model has been constructed from available electrophysiological and neuroanatomical data to integrate the principal traits of the neural processing structure and to study sensory interaction with motor-command-driven corollary discharge signals. This has been used to explore neural coding strategies at successive stages in the network and to examine the simulated network capacity to reproduce output neuron responses. The model shows that the network has the ability to resolve primary afferent spike timing differences in the sub-millisecond range, and that this depends on the coincidence of sensory and corollary discharge-driven gating signals. In the integrative and output stages of the network, corollary discharge sets up a proactive background filter, providing temporally structured excitation and inhibition within the network whose balance is then modulated locally by sensory input. This complements the initial gating mechanism and contributes to amplification of the input pattern of latencies, conferring network hyperacuity. These mechanisms give the system a robust capacity to extract behaviorally meaningful features of the electric image with high sensitivity over a broad working range. Since the network largely depends on spike timing, we finally discuss its suitability for. implementation in robotic applications based on neuromorphic hardware.