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Normal development and function of the central nervous system involves a balance between excitatory and inhibitory neurotransmission. Activity of both excitatory and inhibitory neurons is modulated by inhibitory signalling of the GABAergic and glycinergic systems. Mechanisms that regulate formation, maturation, refinement, and maintenance of inhibitory synapses are established in early life. Deviations from ideal excitatory and inhibitory balance, such as down-regulated inhibition, are linked with many neurological diseases, including epilepsy, schizophrenia, anxiety, and autism spectrum disorders. In the mammalian forebrain, GABA is the primary inhibitory neurotransmitter, binding to GABA receptors, opening chloride channels and hyperpolarizing the cell. We review the involvement of down-regulated inhibitory signalling in neurological disorders, possible mechanisms for disease progression, and targets for therapeutic intervention. We conclude that transgenic models of disrupted inhibitory signalling—in GAD67+/− and VGAT−/− mice—are useful for investigating the effects of down-regulated inhibitory signalling in a range of neurological diseases.