Gamma-Aminobutyric acid (GABA) is a non-protein amino acid widely distributed in nature. It is produced through irreversible α-decarboxylation of glutamate by enzyme glutamate decarboxylase (GAD). GABA and GAD have been found in plants, animals, and microorganisms. GABA is distributed throughout the human body and it is involved in the regulation of cardiovascular conditions such as blood pressure and heart rate, and plays a role in the reduction of anxiety and pain. Although researchers had produced GABA by chemical method earlier it became less acceptable as it pollutes the environment. Researchers now use a more promising microbial method for the production of GABA. In the drug and food industry, demand for GABA is immense. So, large scale conversion of GABA by microbes has got much attention. So this review focuses on the isolation source, production, and functions of GABA in the microbial system. We also summarize the mechanism of action of GABA and its shunt pathway.