The K+-Cl- co-transporter KCC2 (SLC12A5) tunes the efficacy of GABAA receptor-mediated transmission by regulating the intraneuronal chloride concentration [Cl-]i. KCC2 undergoes activity-dependent regulation in both physiological and pathological conditions. The regulation of KCC2 by synaptic excitation is well documented; however, whether the transporter is regulated by synaptic inhibition is unknown. Here we report a mechanism of KCC2 regulation by GABAA receptor (GABAAR)-mediated transmission in mature hippocampal neurons. Enhancing GABAAR-mediated inhibition confines KCC2 to the plasma membrane, while antagonizing inhibition reduces KCC2 surface expression by increasing the lateral diffusion and endocytosis of the transporter. This mechanism utilizes Cl- as an intracellular secondary messenger and is dependent on phosphorylation of KCC2 at threonines 906 and 1007 by the Cl--sensing kinase WNK1. We propose this mechanism contributes to the homeostasis of synaptic inhibition by rapidly adjusting neuronal [Cl-]i to GABAAR activity.