Drugs of abuse are known to cause persistent modification of neural circuits, leading to addictive behaviours. Changes in synaptic plasticity in dopamine neurons of the ventral tegmental area (VTA) may contribute to circuit modification induced by many drugs of abuse, including cocaine. Here we report that, following repeated exposure to cocaine in vivo, excitatory synapses to rat VTA dopamine neurons become highly susceptible to the induction of long-term potentiation (LTP) by correlated pre- and postsynaptic activity. This facilitated LTP induction is caused by cocaine-induced reduction of GABA(A) (gamma-aminobutyric acid) receptor-mediated inhibition of these dopamine neurons. In midbrain slices from rats treated with saline or a single dose of cocaine, LTP could not be induced in VTA dopamine neurons unless GABA-mediated inhibition was reduced by bicuculline or picrotoxin. However, LTP became readily inducible in slices from rats treated repeatedly with cocaine; this LTP induction was prevented by enhancing GABA-mediated inhibition using diazepam. Furthermore, repeated cocaine exposure reduced the amplitude of GABA-mediated synaptic currents and increased the probability of spike initiation in VTA dopamine neurons. This cocaine-induced enhancement of synaptic plasticity in the VTA may be important for the formation of drug-associated memory.