Volatile (inhaled) anesthetics cause amnesia at concentrations well below those that cause loss of consciousness and immobility; however, the underlying neuronal mechanisms are unknown. Although many anesthetics increase inhibitory GABAergic synaptic transmission, this effect occurs only at high concentrations (>100 μm). Molecular targets for low concentrations of inhaled anesthetics have not been identified. Here, we report that a tonic inhibitory conductance in hippocampal pyramidal neurons generated by α5 subunit-containing GABA_A receptors is highly sensitive to low concentrations of the volatile anesthetic isoflurane (ISO) (25 and 83.3 μm). The α5 subunit is necessary for enhancement of the tonic current by these low concentrations of isoflurane because potentiation is absent in neurons from α5^-/- mice. Furthermore, ISO (25 μm) potentiated recombinant human α5β3γ2L GABA_A receptors, whereas this effect was not seen with α1β3γ2L GABA_A receptors. These studies suggest that an increased tonic inhibition in the hippocampus may contribute to amnestic properties of volatile anesthetics.