Oxytocin is important for social interactions and maternal behaviour. However, little is known about when, where and how oxytocin modulates neural circuits to improve social cognition. Here we show how oxytocin enables pup retrieval behaviour in female mice by enhancing auditory cortical pup call responses. Retrieval behaviour required the left but not right auditory cortex, was accelerated by oxytocin in the left auditory cortex, and oxytocin receptors were preferentially expressed in the left auditory cortex. Neural responses to pup calls were lateralized, with co-tuned and temporally precise excitatory and inhibitory responses in the left cortex of maternal but not pup-naive adults. Finally, pairing calls with oxytocin enhanced responses by balancing the magnitude and timing of inhibition with excitation. Our results describe fundamental synaptic mechanisms by which oxytocin increases the salience of acoustic social stimuli. Furthermore, oxytocin-induced plasticity provides a biological basis for lateralization of auditory cortical processing.