GABA(A) receptor (GABA-AR)-mediated inhibition is critical for proper operation of neuronal networks. Synaptic inhibition either shifts the membrane potential farther away from the action potential firing threshold (hyperpolarizing inhibition) or via increase in the membrane conductance shunts the excitatory currents. However, the relative importance of these different forms of inhibition on the hippocampal function is unclear. To study the functional consequences of the absence of hyperpolarizing inhibition, we have used KCC2-deficient mice (KCC2hy/null) maintaining only 15-20% of the neuron-specific K-Cl-cotransporter. Gramicidin-perforated patch-clamp recordings in hippocampal CA1 pyramidal cells revealed that the reversal potential of the GABA-AR-mediated postsynaptic currents (E(GABA-A)) was approximately 20 mV more positive in KCC2hy/null mice than in wild-type (WT) animals. The basic glutamatergic transmission appeared unaltered in the KCC2hy/null mice, yet they displayed lowered threshold for stimulation-induced synchronous afterdischarges in the CA1 area. Also fatigue of field excitatory postsynaptic potentials/excitatory postsynaptic currents in response to repetitious stimulation was smaller in KCC2hy/null mice, indicating altered synaptic dynamics. Interestingly, this effect was present also under blockade of GABA-ARs and was dependent on the extracellular K+ concentration. Moreover, there were no differences in the levels of either long-term potentiation or long-term depression between the genotypes. The local hippocampal CA1 network can in several aspects maintain its functional viability even in the absence of hyperpolarizing inhibition in pyramidal cells. Our results underscore the central role of shunting type of inhibition in controlling the neuronal excitation/inhibition balance. Moreover, our data demonstrate a novel, unexpected role for the KCC2, namely the modulation of properties of glutamatergic transmission during repetitious afferent activity.