Previously studied for its role in processing olfactory information in the antennal lobe, GABA also may shape development of the olfactory pathway, acting either through or on glial cells. Early in development, the dendrites of GABAergic neurons extend to the glial border that surrounds the nascent olfactory lobe neuropil. These neuropil glia express both GABAA and GABAB receptors, about half of the glia in acute cultures responded to GABA with small outward currents, and about a third responded with small transient increases in intracellular calcium. The neuronal classes that express GABA in vivo, the local interneurons and a subset of projection neurons, also do so in culture. Exposure to GABA in culture increased the size and complexity of local interneurons, but had no effect on glial morphology. The presence of glia alone did not affect neuronal morphology, but in the presence of both glia and GABA, the growth-enhancing effects of GABA on cultured antennal lobe neurons were eliminated. Contact between the glial cells and the neurons was not necessary. Operating in vivo, these antagonistic effects, one direct and one glia mediated, could help to sculpt the densely branched, tufted arbors that are characteristic of neurons innervating olfactory glomeruli.