At least 70% of the afferents to substantia nigra dopaminergic neurons are GABAergic. The vast majority of these arise from the neostriatum, the external globus pallidus and the substantia nigra pars reticulata. Nigral dopaminergic neurons express both GABAA and GABAB receptors, and are inhibited by local application of GABAA or GABAB agonists in vivo and in vitro. However, in vivo, synaptic responses elicited by stimulation of neostriatal or pallidal afferents, or antidromic activation of nigral pars reticulata GABAergic projection neurons are mediated predominantly or exclusively by GABAA receptors. The clearest and most consistent role for the nigral GABAB receptor in vivo is as an inhibitory autoreceptor that presynaptically modulates GABAA synaptic responses that originate from all three principal GABAergic inputs. The firing pattern of dopaminergic neurons is also effectively modulated by GABAergic inputs in vivo. Local blockade of nigral GABAA receptors causes dopaminergic neurons to shift to a burst firing pattern regardless of the original firing pattern. This is accompanied by a modest increase in spontaneous firing rate. The GABAergic inputs from the axon collaterals of the pars reticulata projection neurons seem to be a particularly important source of a GABAA tone to the dopaminergic neurons, inhibition of which leads to burst firing. The globus pallidus exerts powerful control over the pars reticulata input, and through the latter, disynaptically over the dopaminergic neurons. Inhibition of pallidal output leads to a slight decrease in firing of the dopaminergic neurons due to disinhibition of the pars reticulata neurons whereas increased firing of pallidal neurons leads to burst firing in dopaminergic neurons that is associated with a modest increase in spontaneous firing rate and a significant increase in extracellular levels of dopamine in the neostriatum. The pallidal disynaptic disinhibitory control of the dopaminergic neurons dominates the monosynaptic inhibitory influence because of a differential sensitivity to GABA of the two nigral neuron types. Nigral GABAergic neurons are more sensitive to GABAA-mediated inhibition than dopaminergic neurons, in part due to a more hyperpolarized GABAA reversal potential. The more depolarized GABAA reversal potential in the dopaminergic neurons is due to the absence of KCC2, the chloride transporter responsible for setting up a hyperpolarizing Cl- gradient in most mature CNS neurons. The data reviewed in this chapter have made it increasingly clear that in addition to the effects that nigral GABAergic output neurons have on their target nuclei outside of the basal ganglia, local interactions between GABAergic projection neurons and dopaminergic neurons are crucially important to the functioning of the nigral dopaminergic neurons.