gamma-Aminobutyric acidA (GABAA) receptors are multisubunit ligand-gated ion channels which mediate neuronal inhibition by GABA and are composed of at least four subunit types (alpha, beta, gamma, and delta). The gamma 2-subunit appears to be essential for benzodiazepine modulation of GABAA receptor function. In cloning murine gamma 2-subunits, we isolated cDNAs encoding forms of the subunit that differ by the insertion of eight amino acids. LLRMFSFK, in the major intracellular loop between proposed transmembrane domains M3 and M4. The two forms of the gamma 2-subunit are generated by alternative splicing, as demonstrated by cloning and partial sequencing of the corresponding gene. The eight-amino-acid insertion encodes a potential consensus serine phosphorylation site for protein kinase C. These results suggest a novel mechanism for the regulation of the GABAA receptor by protein phosphorylation.