Mefenamic acid (MFA) has anti-convulsant and pro-convulsant effects in vivo, and has been shown to potentiate and inhibit GABAA (γ-aminobutyric acid) receptors in vitro. In this study, whole-cell currents were recorded from Xenopus oocytes and human embryonic kidney (HEK) cells expressing human recombinant GABAA receptors to resolve the molecular mechanisms by which MFA modulates GABAA receptor function. We demonstrate that MFA potentiated GABA-activated currents for α1β2 γ2S (EC50 = 3.2 ± 0.5 μm), but not for α1β1 γ2S receptors. MFA also enhanced GABA-activated responses and directly activated α1β2/β3 GABAA receptors, but inhibited responses to GABA on α1β1 constructs (IC50 = 40 ± 7.2 μm). A comparison of β1, β2 and β3 subunits suggested that the positive modulatory action of MFA involved asparagine (N) 290 in the second transmembrane domain (TM2) of the β2 and β3 subunits. Mutation of N290 to serine (S) markedly reduced modulation by MFA in α1β2(N290S)γ2S receptors, whereas α1β1(S290N)γ2S constructs revealed potentiated responses to GABA (EC50 = 7.8 ± 1.7 μm) and direct activation by MFA. The potentiation by MFA displayed voltage sensitivity. The direct activation, potentiation and inhibitory aspects of MFA action were predominantly conferred by the β subunits as the spontaneously active homomeric β1 and β3 receptors were susceptible to modulation by MFA. Molecular comparisons of MFA, loreclezole and etomidate, agents which exhibit similar selectivity for GABAA receptors, revealed their ability to adopt similar structural conformations. This study indicates that N290 in TM2 of β2 and β3 subunits is important for the regulation of GABAA receptor function by MFA. Our data provide a potential molecular mechanism for the complex central effects of MFA in vivo.