Astrocytes are ideally placed to detect and respond to network activity. They express ionotropic and metabotropic receptors, and can release gliotransmitters. Astrocytes also express transporters that regulate the extracellular concentration of neurotransmitters. Here we report a previously unrecognized role for the astrocytic GABA transporter, GAT-3. GAT-3 activity results in a rise in astrocytic Na+ concentrations and a consequent increase in astrocytic Ca2+ through Na+/Ca2+ exchange. This leads to the release of ATP/adenosine by astrocytes, which then diffusely inhibits neuronal glutamate release via activation of presynaptic adenosine receptors. Through this mechanism, increases in astrocytic GAT-3 activity due to GABA released from interneurons contribute to 'diffuse' heterosynaptic depression. This provides a mechanism for homeostatic regulation of excitatory transmission in the hippocampus.