Maintaining a proper balance between the glutamate receptor-mediated neuronal excitation and the A type of GABA receptor (GABA AR) mediated inhibition is essential for brain functioning; and its imbalance contributes to the pathogenesis of many brain disorders including neurodegenerative diseases and mental illnesses. Here we identify a novel glutamate-GABA AR interaction mediated by a direct glutamate binding of the GABA AR. In HEK293 cells overexpressing recombinant GABA ARs, glutamate and its analog ligands, while producing no current on their own, potentiate GABA-evoked currents. This potentiation is mediated by a direct binding at a novel glutamate binding pocket located at the α +/β − subunit interface of the GABA AR. Moreover, the potentiation does not require the presence of a γ subunit, and in fact, the presence of γ subunit significantly reduces the potency of the glutamate potentiation. In addition, the glutamate-mediated allosteric potentiation occurs on native GABA ARs in rat neurons maintained in culture, as evidenced by the potentiation of GABA AR-mediated inhibitory postsynaptic currents and tonic currents. Most importantly, we found that genetic impairment of this glutamate potentiation in knock-in mice resulted in phenotypes of increased neuronal excitability, including decreased thresholds to noxious stimuli and increased seizure susceptibility. These results demonstrate a novel cross-talk between excitatory transmitter glutamate and inhibitory GABA AR. Such a rapid and short feedback loop between the two principal excitatory and inhibitory neurotransmission systems may play a critical homeostatic role in fine-tuning the excitation-inhibition balance (E/I balance), thereby maintaining neuronal excitability in the mammalian brain under both physiological and pathological conditions.