Brain-derived neurotrophic factor (BDNF) potentiates excitatory synapses in a variety of systems by promoting presynaptic transmitter release. The existing evidence indicates that BDNF attenuates inhibitory transmission, but reports differ considerably in their characterization of the effect and proposed mechanisms. We examined the effects of exogenously applied BDNF on EPSCs and IPSCs recorded from functionally identified neurons in dissociated rat hippocampal cultures. When recording from glutamatergic neurons, we found that BDNF exerted differential effects at excitatory versus inhibitory synapses: increasing amplitude of EPSCs but slightly decreasing that of IPSCs. Furthermore, when recording from GABAergic neurons, we found that BDNF increased the IPSC amplitude. That these differential BDNF effects reflect distinct presynaptic and postsynaptic mechanisms was suggested by the BDNF-induced changes in miniature EPSCs and IPSCs. An increased mini-frequency was found at all synapses, indicating elevated presynaptic transmitter secretion; a change in the amplitude of mini-IPSCs was found at GABAergic cells, suggesting postsynaptic modulation of GABA responses. Selective postsynaptic mechanisms were further examined by comparing the effect of BDNF on GABA-induced currents recorded from glutamatergic versus GABAergic cells. For GABAergic but not glutamatergic postsynaptic cells, BDNF induced a shift in the reversal potential (EIPSC) toward more positive levels, hence reducing the inhibitory action of IPSCs. This BDNF-induced effect correlates with the existing level of furosemide-sensitive K+-Cl- transport activity in the postsynaptic cell. Thus, BDNF may decrease the efficacy of inhibitory transmission by acute postsynaptic downregulation of Cl- transport, in addition to its well known presynaptic effect.