Signals from the bilateral vestibular labyrinths work in tandem to generate robust estimates of our motion and orientation in the world. The relative contributions of each labyrinth to behavior, as well as how the brain recovers after unilateral peripheral damage, have been characterized for motor reflexes, but never for perceptual functions. Here we measure perceptual deficits in a heading discrimination task following surgical ablation of the neurosensory epithelium in one labyrinth. We found large increases in heading discrimination thresholds and large perceptual biases at 1 wk postlesion. Repeated testing thereafter improved heading perception, but vestibular discrimination thresholds remained elevated 3 mo postlesion. Electrophysiological recordings from the contralateral vestibular and cerebellar nuclei revealed elevated neuronal discrimination thresholds, elevated neurometric-to-psychometric threshold ratios, and reduced trial-by-trial correlations with perceptual decisions ["choice probabilities" (CPs)]. The relationship between CP and neuronal threshold was shallower, but not significantly altered, suggesting that smaller CPs in lesioned animals could be largely attributable to greater neuronal thresholds. Simultaneous recordings from pairs of neurons revealed that correlated noise among neurons was also reduced following the lesion. Simulations of a simple pooling model, which takes into account the observed changes in tuning slope and correlated noise, qualitatively accounts for the elevated psychophysical thresholds and neurometric-to-psychometric ratios, as well as the decreased CPs. Thus, cross-labyrinthine interactions appear to play important roles in enhancing neuronal and perceptual sensitivity, strengthening interneuronal correlations, and facilitating correlations between neural activity and perceptual decisions.