Shrm4, a protein expressed only in polarized tissues, is encoded by the KIAA1202 gene, whose mutations have been linked to epilepsy and intellectual disability. However, a physiological role for Shrm4 in the brain is yet to be established. Here, we report that Shrm4 is localized to synapses where it regulates dendritic spine morphology and interacts with the C terminus of GABA B receptors (GABA B Rs) to control their cell surface expression and intracellular trafficking via a dynein-dependent mechanism. Knockdown of Shrm4 in rat severely impairs GABA B R activity causing increased anxiety-like behaviour and susceptibility to seizures. Moreover, Shrm4 influences hippocampal excitability by modulating tonic inhibition in dentate gyrus granule cells, in a process involving crosstalk between GABA B Rs and extrasynaptic Î-subunit-containing GABA A Rs. Our data highlights a role for Shrm4 in synaptogenesis and in maintaining GABA B R-mediated inhibition, perturbation of which may be responsible for the involvement of Shrm4 in cognitive disorders and epilepsy. © 2017 The Author(s).