Nearly all organisms contain and synthesize γ-aminobutyric acid (GABA), from bacteria (Ackermann, 1910) through plants (Steward et al., 1949) up to humans (Elliott and Jasper, 1959). In plants, GABA serves as an important metabolic compound, but its role as a signal molecule was also demonstrated (Bouche et al., 2003). The presence of GABA and the similarity of GABA signaling in a broad range of tissues and organisms argue for the importance of phylogenetically conserved GABA-functions. In the mammalian brain, GABA was recognized more than 50 years ago (Awapara et al., 1950). Soon after, strong evidence indicated that GABA acts as an inhibitory neurotransmitter in both the vertebrate and invertebrate nervous system. Beside the accumulation at presynapses and in the postsynaptic densities, different types of GABA receptors were shown in extrasynaptic locations on various types of neurons (Farrant and Nusser, 2005) and also on non-neuronal cells (Watanabe et al., 2002). During the last 20 years, it was revealed that most neuronal precursors respond to GABA by depolarization in defined phases of differentiation. GABA-induced anion fluxes result in hyperpolarization in later stages of development, in conjunction with the maturation of neuronal ion-homeostasis (Owens and Kriegstein, 2002). In the developing mammalian central nervous system, many neurons and glial cells produce and release GABA. Besides its excitatory or inhibitory neurotransmitter functions, GABA serves also as an autocrine/paracrine signal molecule, and plays important regulatory roles in the entire period of neural development. In this chapter we give a summary of the recent knowledge of the development of GABA signaling and of the GABA actions, which contribute to the formation of the neural tissue. The first part describes the developmental changes in the composition and distribution of the GABA signaling system. In the second part, we intend to summarize the recent understanding of GABA effects on distinct steps of neuronal differentiation. The chapter does not focus on glial development, and the important modulatory roles of glial cells in almost all aspects of GABA signaling are only occasionally mentioned.