Cocaine withdrawal produces aversive states and vulnerability to relapse, hallmarks of addiction. The lateral habenula (LHb) encodes negative stimuli and contributes to aversive withdrawal symptoms. However, it remains unclear which inputs to LHb promote this and what the consequences are for relapse susceptibility. We report, using rabies-based retrolabeling and optogenetic mapping, that the entopeduncular nucleus (EPN, the mouse equivalent of the globus pallidus interna) projects to an LHb neuronal subset innervating aversion-encoding midbrain GABA neurons. EPN-to-LHb excitatory signaling is limited by GABAergic cotransmission. This inhibitory component decreases during cocaine withdrawal as a result of reduced presynaptic vesicular GABA transporter (VGAT). This shifts the EPN-to-LHb GABA/glutamate balance, disinhibiting EPN-driven LHb activity. Selective virally mediated VGAT overexpression at EPN-to-LHb terminals during withdrawal normalizes GABAergic neurotransmission. This intervention rescues cocaine-evoked aversive states and prevents stress-induced reinstatement, used to model relapse. This identifies diminished inhibitory transmission at EPN-to-LHb GABA/glutamate synapses as a mechanism contributing to the relapsing feature of addictive behavior.