The expression of the gamma 2 subunit into functional GABAA receptors has been examined in the embryonal carcinoma (EC) cell line P19, a pluripotent cell line which differentiates into a neuronal phenotype after exposure to retinoic acid. Whole-cell voltage-clamp recordings were used to examine the characteristics of the GABA receptors expressed in P19 cells at different times after exposure to retinoic acid. Messenger RNA for both the gamma 2L and gamma 2S splice variants of the GABAA receptor increased dramatically following differentiation of P19 EC cells with retinoic acid. By 12 days after retinoic acid treatment, while both mRNAs were present, there was an approximately 10-fold greater abundance of gamma 2S mRNA compared to gamma 2L. However, at this same time point neurons derived from P19 cells stained intensely with a polyclonal antibody raised against a peptide fragment specific for the gamma 2L subunit. A significant increase in both the affinity for GABA and the maximum current amplitude elicited by GABA occurred between 7 and 12 days after retinoic acid treatment. In contrast, the ability of the benzodiazepine agonist flurazepam to potentiate GABA-induced membrane current was the same at 7 and 12 days after retinoic acid treatment. These data suggest that the gamma 2 subunit of the GABAA receptor is expressed early following differentation of P19 cells into a neuronal phenotype, and that this subunit is incorporated into functional GABAA receptors. Moreover, the gamma 2S and gamma 2L splice variants of this subunit may be co-expressed in neurons derived from P19 cells. The observed affinity change for GABA may reflect a time-dependent change in the expression of alpha and/or beta subunits of the GABAA receptor, as occurs in developing neuronal tissue both in vitro and in vivo.