Damage to peripheral nerves is associated with changes in excitability and/or phenotype of primary afferent neurons as well as increased neuronal excitability (central sensitization) and reduced inhibitory tone in the dorsal horn. For instance, in dorsal root ganglia (DRG) brain derived neurotrophic factor (BDNF) is down‐regulated in small cells whilst de novo expressed in large diameter cells. In the dorsal horn, GABA content is decreased. In this study, in a dorsal horn, ‘with dorsal roots attached’ preparation obtained from spinal nerve lesioned Wistar rats, stimulation of ipsilateral dorsal roots at either A fibre or A + C fibre strength did not evoke release of BDNF. In separate experiments, activity‐induced release of GABA in the isolated dorsal horn of neuropathic rats was significantly reduced compared to release in sham operated rats. GABA release could be significantly restored following topical application of BDNF through the dorsal horn preparation. Finally, neuropathic rats developed thermal and mechanical hypersensitivity and thermal hyperalgesia was reduced by intrathecal injection of BDNF. We concluded that BDNF‐induced release of GABA could be a mechanism to explain the antinociceptive action of intrathecal BDNF in neuropathic animals. Furthermore, reduced availability of sensory neuron‐derived BDNF might contribute to the reduced GABAergic tone in the dorsal horn of neuropathic rats.