Behavioral sensitization is the augmented motor-stimulant response that occurs with repeated, intermittent exposure to most drugs of abuse, including cocaine. Sensitization, which is a long-lasting phenomenon, is thought to underlie drug craving and relapse to drug use. Much research has been conducted to determine the neural mechanisms of sensitization. The bulk of this effort has focused on the nucleus accumbens and ventral tegmental area (VTA) that comprise a portion of the mesolimbic dopamine system. Recently, studies have begun to also explore the role of the medial prefrontal cortex (mPFC) in sensitization, in part because this region provides glutamatergic innervation to the VTA and nucleus accumbens. The present review will coalesce these studies into a working hypothesis that states that cocaine sensitization results from a decrease in inhibitory modulation of excitatory transmission from the mPFC to the VTA and nucleus accumbens. The discussion will revolve around how repeated cocaine exposure alters dopamine, gamma-aminobutyric acid (GABA), and glutamate regulation of pyramidal cell activity. It will be proposed that cocaine-induced alterations in cortical transmission occur in two phases. During early withdrawal from repeated cocaine exposure, changes in neurotransmitter release are thought to underlie the decreased inhibitory modulation of pyramidal projection neurons. Following more prolonged withdrawal, the attenuation in inhibitory transmission appears to occur at the receptor level. A model will be presented that may serve to direct future studies on the involvement of the mPFC in the development of cocaine sensitization, which ultimately could lead to development of pharmacotherapies for cocaine addiction.