Nitric oxide (NO) is a gaseous neurotransmitter which plays an important role in neuronal signalling and plasticity throughout the brain. In the cerebellum, NO synthase (NOS) is expressed in parallel fibres and within the internal granule cell layer (IGL). During development there are changes in NOS concentration, distribution and activity within the IGL, suggesting NO may play a role in IGL function. Therefore, the actions of NO in the IGL were investigated. The similar actions of a range of NOS inhibitors and NO scavengers strongly suggested the presence of a tonic level of endogenous NO in the IGL. Both the neuronal and inducible forms of NOS appeared to be sources of this endogenous NO. The effects observed following a reduction in the concentration of endogenous NO were consistent with enhanced granule cell GABAA receptor activation. For example, a reduction in NO concentration led to an increase in the frequency of action potential-dependent phasic GABAergic inhibitory postsynaptic currents (IPSCs) and produced a TTX-insensitive GABAA receptor-mediated current. A direct action of NO on Golgi cell membrane potential and input resistance accounted for the increase in the frequency of phasic GABA release. The mechanism underlying the tonic GABA current is unclear but does not appear to be via the modulation of GABA uptake or the activation of nicotinic acetylcholine receptors. NO is a potentially novel mechanism for tuning GABAergic signalling to granule cells and therefore modulating the throughput of an important cerebellar circuit.