Sorting nexin 27 (SNX27), a brain-enriched PDZ domain protein, regulates endocytic sorting and trafficking. Here we show that Snx27(-/-) mice have severe neuronal deficits in the hippocampus and cortex. Although Snx27(+/-) mice have grossly normal neuroanatomy, we found defects in synaptic function, learning and memory and a reduction in the amounts of ionotropic glutamate receptors (NMDA and AMPA receptors) in these mice. SNX27 interacts with these receptors through its PDZ domain, regulating their recycling to the plasma membrane. We demonstrate a concomitant reduced expression of SNX27 and CCAAT/enhancer binding protein β (C/EBPβ) in Down's syndrome brains and identify C/EBPβ as a transcription factor for SNX27. Down's syndrome causes overexpression of miR-155, a chromosome 21-encoded microRNA that negatively regulates C/EBPβ, thereby reducing SNX27 expression and resulting in synaptic dysfunction. Upregulating SNX27 in the hippocampus of Down's syndrome mice rescues synaptic and cognitive deficits. Our identification of the role of SNX27 in synaptic function establishes a new molecular mechanism of Down's syndrome pathogenesis.