Activin, a member of the transforming growth factor-β family, exerts multiple functions in the nervous system. Originally identified as a neurotrophic and -protective agent, increasing evidence implicates activin also in the regulation of glutamatergic and GABAergic neurotransmission in brain regions associated with cognitive and affective functions. To explore how activin impacts on ethanol potentiation of GABA synapses and related behavioral paradigms, we used an established transgenic model of disrupted activin receptor signaling, in which mice express a dominant-negative activin receptor IB mutant (dnActRIB) under the control of the CaMKIIα promoter. Comparison of GABAA receptor currents in hippocampal neurons from dnActRIB mice and wild-type mice showed that all concentrations of ethanol tested (30-150 mM) produced much stronger potentiation of phasic inhibition in the mutant preparation. In dentate granule cells of dnActRIB mice, tonic GABA inhibition was more pronounced than in wild-type neurons, but remained insensitive to low ethanol (30 mM) in both preparations. The heightened ethanol sensitivity of phasic inhibition in mutant hippocampi resulted from both pre- and postsynaptic mechanisms, the latter probably involving PKCɛ. At the behavioral level, ethanol produced significantly stronger sedation in dnActRIB mice than in wild-type mice, but did not affect consumption of ethanol or escalation after withdrawal. We link the abnormal narcotic response of dnActRIB mice to ethanol to the excessive potentiation of inhibitory neurotransmission. Our study suggests that activin counteracts oversedation from ethanol by curtailing its augmenting effect at GABA synapses.