Activation of GABA(A) receptors (GABARs) produces two forms of inhibition: phasic inhibition generated by the rapid, transient activation of synaptic GABARs by presynaptic GABA release, and tonic inhibition generated by the persistent activation of perisynaptic or extrasynaptic GABARs, which can detect extracellular GABA. Tonic GABAR-mediated currents are present in multifarious neuronal subtypes in the hippocampus, but are predominantly mediated by alpha5 subunit-containing and delta subunit-containing GABA(A) receptors. These tonic currents have a profound effect upon neuronal excitability, and can be regulated over different time scales through receptor expression, receptor modulation and changes in extracellular GABA concentrations. This talk will present recent evidence on the regulation of extracellular GABA in the hippocampus and its impact on tonic inhibition, and on how extrasynaptic GABA(A) receptor characteristics contribute to the their computational role. In vivo, GABA concentrations in the hippocampus (measured using microdialysis) under resting conditions are of the order of 100 nM, and even lower concentrations are detected by principal neurons. The tight regulation of extracellular GABA is maintained by effective GABA transporters: GAT1 which mainly regulates GABA originating from the synaptic pool, and GAT3 which predominantly regulates GABA originating from the extrasynaptic pool. GAT3 can also contribute to regulation of synaptically released GABA when GAT1 is blocked or when network activity increases. The low concentration of GABA during resting condition means that a substantial proportion of the tonic current is mediated by spontaneously opening GABARs. These spontaneously opening GABARs maintain a lower limit to tonic inhibition and permit regulation through modulators even when GABA is not being detected. Spontaneously opening receptors also have a different pharmacology from openings due to GABA binding. Increases in synaptic activity can raise the extracellular GABA; during seizure-like activity, the GABA can rise 3-4 fold. This results in increases in tonic currents, both through direct activation of GABARs and also through GABA(B) receptor-dependent enhancement of extrasynaptic GABAR function. This increase in tonic currents generally inhibits neurons, but can have biphasic effects in interneurons in which the GABAR reversal potential is depolarizing relative to resting membrane potential. The computational effect of increasing extrasynaptic GABR activation is partly dependent upon the current-voltage characteristics of the receptors, which show marked outward rectification. This results in a shunting effect of tonic inhibition at spiking threshold with a much lesser effect on noise at resting membrane potential. The consequence of this outward rectification is that tonic currents in pyramidal cells affect offset of the input-output function of neurons without affecting gain. In contrast, synaptic inhibition affects both offset and gain. In temporal lobe epilepsy, in which there is a shift from phasic to tonic inhibition, the input-output functions of neurons would be expected to have maintained off-set but increased gain. We hypothesize that such a change results in network instability, contributing to the sporadic occurrence of seizures.