•Trauma exposure in veterans may be associated with lower GABA/H2O in the dorsal ACC.•Trauma exposure in veterans may be associated with lower glutamine/H2O in the dorsal ACC.•Dorsal ACC GABA/H2O and sleep problems were negatively correlated in the PTSD group. Trauma-related diagnoses such as posttraumatic stress disorder (PTSD) are prevalent in veterans. The identification of mechanisms related to stress vulnerability and development of PTSD specifically in a veteran population may aid in the prevention of PTSD and identification of novel treatment targets. Veterans with PTSD (n = 27), trauma-exposed veterans with no PTSD (TEC, n = 18) and non-trauma-exposed controls (NTEC, n = 28) underwent single-voxel proton (1H) magnetic resonance spectroscopy (MRS) at 3 Tesla in the dorsal anterior cingulate cortex (dACC) using a two-dimensional (2D) J-resolved point spectroscopy sequence in addition to completing a clinical battery. The PTSD and TEC groups demonstrated lower gamma-amino butyric acid (GABA)/H2O (p = 0.02) and glutamine (Gln)/H2O (p = 0.02) in the dACC as compared to the NTEC group. The PTSD group showed a trend towards higher Glu/GABA (p = 0.053) than the NTEC group. Further, GABA/H2O in the dACC correlated negatively with sleep symptoms in the PTSD group (p = 0.03) but not in the TEC and NTEC groups. Cross-sectional study design, concomitant medications, single voxel measurement as opposed to global changes, absence of measure of childhood or severity of trauma and objective sleep measures, female participants not matched for menstrual cycle phase. Exposure to trauma in veterans may be associated with lower GABA/H2O and Gln/H2O in the dACC, suggesting disruption in the GABA-Gln-glutamate cycle. Further, altered Glu/GABA in the dACC in the PTSD group may indicate an excitatory-inhibitory imbalance. Further, lower GABA/H2O in the ACC was associated with poor sleep in the PTSD group. Treatments that restore GABAergic balance may be particularly effective in reducing sleep symptoms in PTSD.