Neuronal activity-regulated gene expression has been suggested to be an important mediator of long-lasting, experience-dependent changes in the nervous system, but the activity-dependent component of gene transcription has never been selectively isolated and tested for its functional significance. Here, we demonstrate that introduction of a subtle knockin mutation into the mouse Bdnf gene that blocks the ability of the activity-regulated factor CREB to bind Bdnf promoter IV results in an animal in which the sensory experience-dependent induction of Bdnf expression is disrupted in the cortex. Neurons from these animals form fewer inhibitory synapses, have fewer spontaneous inhibitory quantal events, and exhibit reduced expression of inhibitory presynaptic markers in the cortex. These results indicate a specific requirement for activity-dependent Bdnf expression in the development of inhibition in the cortex and demonstrate that the activation of gene expression in response to experience-driven neuronal activity has important biological consequences in the nervous system.