Accumulation of GABAA receptors (GABAARs) at GABAergic synapses requires the cytoplasmic loop region and C-terminal transmembrane domain of the receptor γ2 subunit. We here report a novel interaction of γ2 with Calcium-Modulating cyclophilin Ligand (CAML), an integral membrane protein that regulates this mechanism. Interaction of GABAARs with CAML depends on both the cytoplasmic region and fourth transmembrane domain of the γ2 subunit, CAML immunoprecipitates with GABAARs from transfected cells and brain lysates and colocalizes with γ2 in ER vesicles in soma and dendrites of neurons. CAML shRNA treatment results in reduced expression of postsynaptic GABAARs, along with significant reductions in GABA-evoked whole cell currents and GABAergic synaptic function, while glutamatergic transmission is unaffected. Reduced surface expression of GABAARs in CAML mutant neurons is associated with selective deficits in recycling of endocytosed GABAARs to the cell surface. Our results indicate a specific role of CAML in functional expression and endocytic recycling of postsynaptic GABAARs.