Abnormalities in the gamma-aminobutyric acid (GABA) neurotransmitter system have been noted in subjects with mood and anxiety disorders. Glutamic acid decarboxylase (GAD) enzymes synthesize GABA from glutamate, and, thus, are reasonable candidate susceptibility genes for these conditions. In this study, we examined the GAD1 and GAD2 genes for their association with genetic risk across a range of internalizing disorders. We used multivariate structural equation modeling to identify common genetic risk factors for major depression, generalized anxiety disorder, panic disorder, agoraphobia, social phobia and neuroticism (N) in a sample of 9270 adult subjects from the population-based Virginia Adult Twin Study of Psychiatric and Substance Use Disorders. One member from each twin pair for whom DNA was available was selected as a case or control based on scoring at the extremes of the genetic factor extracted from the analysis. The resulting sample of 589 cases and 539 controls was entered into a two-stage association study in which candidate loci were screened in stage 1, the positive results of which were tested for replication in stage 2. Several of the six single-nucleotide polymorphisms tested in the GAD1 region demonstrated significant association in both stages, and a combined analysis in all 1128 subjects indicated that they formed a common high-risk haplotype that was significantly over-represented in cases (P=0.003) with effect size OR=1.23. Out of 14 GAD2 markers screened in stage 1, only one met the threshold criteria for follow-up in stage 2. This marker, plus three others that formed significant haplotype combinations in stage 1, did not replicate their association with the phenotype in stage 2. Subject to confirmation in an independent sample, our study suggests that variations in the GAD1 gene may contribute to individual differences in N and impact susceptibility across a range of anxiety disorders and major depression.