Emerging evidence has implicated a potential role for 5-HT(4) receptors in cognition and anxiolysis. One of the main target structures of 5-HT(4) receptors on 'cognitive and emotional' pathways is the prefrontal cortex (PFC). As GABAergic signalling plays a key role in regulating PFC functions, we examined the effect of 5-HT(4) receptors on GABA(A) receptor channels in PFC pyramidal neurons. Application of 5-HT(4) receptor agonists produced either an enhancement or a reduction of GABA-evoked currents in PFC neurons, which are both mediated by anchored protein kinase A (PKA). Although PKA phosphorylation of GABA(A) receptor beta3 or beta1 subunits leads to current enhancement or reduction respectively in heterologous expression systems, we found that beta3 and beta1 subunits are co-expressed in PFC pyramidal neurons. Interestingly, altering PKA activation levels can change the direction of the dual effect, switching enhancement to reduction and vice versa. In addition, increased neuronal activity in PFC slices elevated the PKA activation level, changing the enhancing effect of 5-HT(4) receptors on the amplitude of GABAergic inhibitory postsynaptic currents (IPSCs) to a reduction. These results suggest that 5-HT(4) receptors can modulate GABAergic signalling bidirectionally, depending on the basal PKA activation levels that are determined by neuronal activity. This modulation provides a unique and flexible mechanism for 5-HT(4) receptors to dynamically regulate synaptic transmission and neuronal excitability in the PFC network.