Kainic acid-induced neuron loss in the hippocampal dentate gyrus may cause epileptogenic hyperexcitability by triggering the formation of recurrent excitatory connections among normally unconnected granule cells. We tested this hypothesis by assessing granule cell excitability repeatedly within the same awake rats at different stages of the synaptic reorganization process initiated by kainate-induced status epilepticus (SE). Granule cells were maximally hyperexcitable to afferent stimulation immediately after SE and became gradually less excitable during the first month post-SE. The chronic epileptic state was characterized by granule cell hyperinhibition, i.e., abnormally increased paired-pulse suppression and an abnormally high resistance to generating epileptiform discharges in response to afferent stimulation. Focal application of the γ-aminobutyric acid type A (GABAA) receptor antagonist bicuculline methiodide within the dentate gyrus abolished the abnormally increased paired-pulse suppression recorded in chronically hyperinhibited rats. Combined Timm staining and parvalbumin immunocytochemistry revealed dense innervation of dentate inhibitory interneurons by newly formed, Timm-positive, mossy fiber terminals. Ultrastructural analysis by conventional and postembedding GABA immunocytochemical electron microscopy confirmed that abnormal mossy fiber terminals of the dentate inner molecular layer formed frequent asymmetrical synapses with inhibitory interneurons and with GABA-immunopositive dendrites as well as with GABA-immunonegative dendrites of presumed granule cells. These results in chronically epileptic rats demonstrate that dentate granule cells are maximally hyperexcitable immediately after SE, prior to mossy fiber sprouting, and that synaptic reorganization following kainate-induced injury is temporally associated with GABAA receptor-dependent granule cell hyperinhibition rather than a hypothesized progressive hyperexcitability. The anatomical data provide evidence of a possible anatomical substrate for the chronically hyperinhibited state. J. Comp. Neurol. 494:944–960, 2006. © 2005 Wiley-Liss, Inc.