Heparin-binding growth-associated molecule is a developmentally regulated extracellular matrix protein promoting neurite outgrowth, axonal guidance and synaptogenesis. In the hippocampus, heparin-binding growth-associated molecule is expressed in an activity-dependent manner, and has been shown to suppress long-term potentiation of glutamatergic synapses in the area CA1, but the mechanisms underlying this action are unknown. One of the mechanisms by which extracellular matrix proteins might modulate fast synaptic transmission is by altering GABAergic function. Therefore, we have studied the properties of GABAA receptor-mediated inhibition in hippocampus of mutant mice overexpressing heparin-binding growth-associated molecule (heparin-binding growth-associated molecule transgenics). Under control conditions the wild-type mice have much higher level of long-term potentiation than the transgenics. However, in the absence of the GABAA receptor-mediated-inhibition a similar level of long-term potentiation is seen in both strains. In field potential recordings blockade of GABAA receptors by picrotoxin resulted in more accentuated increase in the CA1 population spike in the transgenics than in the wild-type animals. Whole-cell patch-clamp recordings revealed that when compared with the wild-type animals the transgenic mice had higher frequency of spontaneous inhibitory postsynaptic currents in CA1 pyramidal neurons. However, the frequency of action potential-independent miniature inhibitory postsynaptic currents was similar in both strains. Further, the transgenics had reduced paired-pulse depression of inhibitory postsynaptic currents, which was insensitive to the blockade of GABAB receptors in contrast to wild-type mice. The results demonstrate that the mice overexpressing heparin-binding growth-associated molecule have accentuated hippocampal GABAA receptor-mediated inhibition, which in turn may explain the lowered predisposition of glutamatergic synapses to undergo plastic changes in these animals. Thus, our findings suggest a mechanism by which heparin-binding growth-associated molecule can regulate synaptic plasticity.