The tryptophan metabolite kynurenic acid (KYNA) is an endogenous antagonist of the α7 nicotinic acetylcholine receptor (α7nAChR) and, at higher concentrations, inhibits ionotropic glutamate receptors. Increases in KYNA levels are seen in brain and cerebrospinal fluid in individuals with schizophrenia (SZ) and may be causally related to cognitive deficits in SZ and other psychiatric diseases. As dysfunction of circuits involving GABAergic neurons in the prefrontal cortex (PFC) likely plays a role in the cognitive impairments seen in these disorders, we examined the effects of KYNA on extracellular GABA in this brain area. Applied to awake rats for 2 h by reverse dialysis, KYNA concentration-dependently and reversibly reduced extracellular GABA levels, with 300 nM KYNA causing a nadir of ˜45% of baseline concentrations. This effect was not duplicated by reverse dialysis of the selective glycineB receptor antagonist 7-Cl-KYNA (100 nM) or the AMPA/kainate receptor antagonist CNQX (100 μM), and was prevented by co-application of galantamine (5 μM), a positive allosteric modulator of the α7nAChR. Conversely, inhibition of endogenous KYNA formation by reverse dialysis of (S)-4-(ethylsulfonyl)benzoylalanine (ESBA; 5 mM) reversibly increased GABA levels in the PFC, reaching a peak of ˜160% of baseline concentrations. Co-infusion of 30 nM KYNA neutralized this effect. Taken together, these results demonstrate a role for endogenous KYNA in the bi-directional control of GABAergic neurotransmission in the PFC. Pharmacological manipulation of KYNA may therefore be useful in the treatment of GABAergic impairments in SZ and other brain disorders involving the PFC.