The function of the amyloid precursor protein (APP) is not fully understood, but its cleavage product amyloid beta (Aβ) together with neurofibrillary tangles constitute the hallmarks of Alzheimer's disease (AD). Yet, imbalance of excitatory and inhibitory neurotransmission accompanied by loss of synaptic functions, has been reported much earlier and independent of any detectable pathological markers. Recently, soluble APP fragments have been shown to bind to presynaptic GABA receptors (GABA Rs), subsequently decreasing the probability of neurotransmitter release. In this body of work, we were able to show that overexpression of wild-type human APP in mice (hAPP ) causes early cognitive impairment, neuronal loss, and electrophysiological abnormalities in the absence of amyloid plaques and at very low levels of Aβ. hAPP mice exhibited neuronal overexcitation that was evident in EEG and increased long-term potentiation (LTP). Overexpression of hAPP did not alter GABAergic/glutamatergic receptor components or GABA production ability. Nonetheless, we detected a decrease of GABA but not glutamate that could be linked to soluble APP fragments, acting on presynaptic GABA Rs and subsequently reducing GABA release. By using a specific presynaptic GABA R antagonist, we were able to rescue hyperexcitation in hAPP animals. Our results provide evidence that APP plays a crucial role in regulating inhibitory neurotransmission.