After its release from interneurons in the CNS, the major inhibitory neurotransmitter GABA is taken up by GABA transporters (GATs). The predominant neuronal GABA transporter GAT1 is localized in GABAergic axons and nerve terminals, where it is thought to influence GABAergic synaptic transmission, but the details of this regulation are unclear. To address this issue, we have generated a strain of GAT1-deficient mice. We observed a large increase in a tonic postsynaptic hippocampal GABAA receptor-mediated conductance. There was little or no change in the waveform or amplitude of spontaneous inhibitory postsynaptic currents (IPSCs) or miniature IPSCs. In contrast, the frequency of quantal GABA release was one-third of wild type (WT), although the densities of GABAA receptors, GABAB receptors, glutamic acid decarboxylase 65 kDa, and vesicular GAT were unaltered. The GAT1-deficient mice lacked a presynaptic GABAB receptor tone, present in WT mice, which reduces the frequency of spontaneous IPSCs. We conclude that GAT1 deficiency leads to enhanced extracellular GABA levels resulting in an overactivation of GABAA receptors responsible for a postsynaptic tonic conductance. Chronically elevated GABA levels also downregulate phasic GABA release and reduce presynaptic signaling via GABAB receptors thus causing an enhanced tonic and a diminished phasic inhibition.