Prenatal stress is believed to lead to development of mental illnesses in humans, including major depression. Animal studies show cognitive, behavioral, and psychological abnormalities in different prenatal stress models. Exposure to restraint stress during pregnancy leads to elevated maternal plasma glucocorticoids (GC) in rats, which may influence the developing brain in offspring. The hippocampus, an important part of the limbic system, is particularly sensitive to the early stress–induced elevation in endogenous GCs. Since the GABAergic inhibitory system is proposed to be involved in the pathophysiology of depression, we examined the electrophysiological properties of the GABAergic inhibition in the hippocampus using young or adult offspring of rat dams (Sprague Dawley) exposed to dexamethasone (DEX), a synthetic GC, during the last week of gestation (150 g/kg/day). These rats show depressive-like behavior, and whole-cell patch-clamp recordings were performed from dentate granule cells of brain slices to examine the spontaneous and evoked GABAA receptor mediated phasic inhibition. In 4-week-old rats, a significant decrease in the frequency of spontaneous inhibitory postsynaptic currents (IPSCs) was observed, while action potential independent miniature IPSCs were unchanged. With respect to IPSCs evoked by extracellular paired-pulse stimulation, in DEX rats, we observed a significantly higher paired-pulse ratio in 4-week-old rats compared to controls (DEX: 1.14 ± 0.13, n = 14; control: 0.85 ± 0.04, n = 9; P < 0.05). Our results demonstrate a dysfunction in the limbic GABAergic inhibitory system in rats exposed to prenatal dexamethasone, which may contribute to the pathophysiology of depressive-like behavior in adulthood.