Plasticity related gene-1 (PRG-1) is a brain-specific membrane protein related to lipid phosphate phosphatases, which acts in the hippocampus specifically at the excitatory synapse terminating on glutamatergic neurons. Deletion of prg-1 in mice leads to epileptic seizures and augmentation of EPSCs, but not IPSCs. In utero electroporation of PRG-1 into deficient animals revealed that PRG-1 modulates excitation at the synaptic junction. Mutation of the extracellular domain of PRG-1 crucial for its interaction with lysophosphatidic acid (LPA) abolished the ability to prevent hyperexcitability. As LPA application in vitro induced hyperexcitability in wild-type but not in LPA(2) receptor-deficient animals, and uptake of phospholipids is reduced in PRG-1-deficient neurons, we assessed PRG-1/LPA(2) receptor-deficient animals, and found that the pathophysiology observed in the PRG-1-deficient mice was fully reverted. Thus, we propose PRG-1 as an important player in the modulatory control of hippocampal excitability dependent on presynaptic LPA(2) receptor signaling.