Networks of GABAergic neurons are key elements in the generation of gamma oscillations in the brain. Computational studies suggested that the emergence of coherent oscillations requires hyperpolarizing inhibition. Here, we show that GABA(A) receptor-mediated inhibition in mature interneurons of the hippocampal dentate gyrus is shunting rather than hyperpolarizing. Unexpectedly, when shunting inhibition is incorporated into a structured interneuron network model with fast and strong synapses, coherent oscillations emerge. In comparison to hyperpolarizing inhibition, networks with shunting inhibition show several advantages. First, oscillations are generated with smaller tonic excitatory drive. Second, network frequencies are tuned to the gamma band. Finally, robustness against heterogeneity in the excitatory drive is markedly improved. In single interneurons, shunting inhibition shortens the interspike interval for low levels of drive but prolongs it for high levels, leading to homogenization of neuronal firing rates. Thus, shunting inhibition may confer increased robustness to gamma oscillations in the brain.