Intractable seizures originating in the mesial temporal lobe can often be controlled by resection. An alternative to removing hippocampal tissue may be transplantation of GABA-producing cells. Neural cell transplantation has been performed in hundreds of patients, including some with temporal lobe epilepsy. This study evaluates the seizure-suppressing capabilities of engineered GABA-producing cells transplanted into the dentate gyrus. Immortalized neurons were engineered to produce GABA under the control of doxycycline. The cells were characterized for GABA production in vitro and for their ability to raise GABA concentrations in vivo. Cells were transplanted bilaterally into the dentate gyrus of rats and tested in two separate paradigms. Afterdischarge thresholds and durations were tested with granule cell stimulation, and the development of behavioral seizures, induced by daily electrical stimulation of the major excitatory input pathway into the dentate gyrus, was assessed in the presence, or the absence, of doxycycline. GABA production was under the tight control of doxycycline. Cells engineered to produce GABA raised tissue GABA concentrations in the hippocampus compared with non GABA-producing cells, and this was abolished when doxycycline was administered. GABA-producing cells raised the threshold, and shortened the duration of hippocampal afterdischarges elicited by granule cell stimulation. Lastly, the appearance of stage 5 seizures was slowed in the kindling paradigm, compared with a group that received non-GABA-producing cells, and compared with a group that received GABA-producing cells but was administered doxycycline. This study shows that targeted hippocampal implants of genetically engineered cells have the potential to raise GABA levels and to affect seizure development. The ability to suppress the production of GABA, and to modulate the physiological effects of the transplanted cells provides an important level of experimental control. These techniques, combined with stem cell technology, may advance cell-based therapies for epilepsy and other diseases of the CNS.