Accumulating evidence indicates that GABA acts beyond inhibitory synaptic transmission and regulates the development of inhibitory synapses in the vertebrate brain, but the underlying cellular mechanism is not well understood. We have combined live imaging of cortical GABAergic axons across time scales from minutes to days with single-cell genetic manipulation of GABA release to examine its role in distinct steps of inhibitory synapse formation in the mouse neocortex. We have shown previously, by genetic knockdown of GABA synthesis in developing interneurons, that GABA signaling promotes the maturation of inhibitory synapses and axons. Here we found that a complete blockade of GABA release in basket interneurons resulted in an opposite effect, a cell-autonomous increase in axon and bouton density with apparently normal synapse structures. These results not only demonstrate that GABA is unnecessary for synapse formation per se but also uncover a novel facet of GABA in regulating synapse elimination and axon pruning. Live imaging revealed that developing GABAergic axons form a large number of transient boutons, but only a subset was stabilized. Release blockade led to significantly increased bouton stability and filopodia density, increased axon branch extension, and decreased branch retraction. Our results suggest that a major component of GABA function in synapse development is transmission-mediated elimination of subsets of nascent contacts. Therefore, GABA may regulate activity-dependent inhibitory synapse formation by coordinately eliminating certain nascent contacts while promoting the maturation of other nascent synapses.