The gamma 3-subunit of the GABAA-receptor in rat brain has been identified by molecular cloning. When co-expressed with the alpha 5- and beta 2-subunits in transfected cells a high potency for GABA (Ka = 4.9 +/- 1.2 microM) and a strong cooperativity in gating the channel (H = 1.9 +/- 0.2) was observed. The GABA response was potentiated in the presence of flunitrazepam and reduced by beta CCM. An analogous bi-directional modulation of the GABA response was observed with diazepam and DMCM as tested with the subunit combinations alpha 1 beta 2 gamma 3 and alpha 3 beta 2 gamma 3 expressed in Xenopus oocytes. Since the benzodiazepine receptor ligands were virtually inactive in the absence of the gamma 3-subunit, as tested with the alpha 3 beta 2- and alpha 5 beta 2-subunit combinations, the gamma 3-subunit is a prerequisite for the benzodiazepine receptor sensitivity of the expressed GABAA-receptors. The gamma 3-subunit could functionally replace the gamma 2-subunit with regard to the bi-directional allosteric drug modulation.