Menthol and other counterstimuli relieve itch, resulting in an antipruritic state that persists for minutes to hours. However, the neural basis for this effect is unclear, and the underlying neuromodulatory mechanisms are unknown. Previous studies revealed that Bhlhb5(-/-) mice, which lack a specific population of spinal inhibitory interneurons (B5-I neurons), develop pathological itch. Here we characterize B5-I neurons and show that they belong to a neurochemically distinct subset. We provide cause-and-effect evidence that B5-I neurons inhibit itch and show that dynorphin, which is released from B5-I neurons, is a key neuromodulator of pruritus. Finally, we show that B5-I neurons are innervated by menthol-, capsaicin-, and mustard oil-responsive sensory neurons and are required for the inhibition of itch by menthol. These findings provide a cellular basis for the inhibition of itch by chemical counterstimuli and suggest that kappa opioids may be a broadly effective therapy for pathological itch.