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Hemizygous mutations in the human gene encoding platelet-activating factor acetylhydrolase IB subunit alpha (Pafah1b1), also called Lissencephaly-1, can cause classical lissencephaly, a severe malformation of cortical development. Children with this disorder suffer from deficits in neuronal migration, severe intellectual disability, intractable epilepsy and early death. While many of these features can be reproduced in Pafah1b1+/- mice, the impact of Pafah1b1+/- on the function of individual subpopulations of neurons and ultimately brain circuits is largely unknown. Here, we show tangential migration of young GABAergic interneurons into the developing hippocampus is slowed in Pafah1b1+/- mice. Mutant mice had a decreased density of parvalbumin- and somatostatin-positive interneurons in dentate gyrus, but no change in density of calretinin interneurons. Whole-cell patch-clamp recordings revealed increased excitatory and decreased inhibitory synaptic inputs onto granule cells of Pafah1b1+/- mice. Mutant animals developed spontaneous electrographic seizures, as well as long-term deficits in contextual memory. Our findings provide evidence of a dramatic shift in excitability in the dentate gyrus of Pafah1b1+/- mice that may contribute to epilepsy or cognitive impairments associated with lissencephaly.