GABAA receptor activation during brain development is a critical source of excitation. This is due to the positive equilibrium potential for chloride relative to resting membrane potential, resulting in membrane depolarization sufficient to open voltage sensitive calcium channels. The gonadal steroid estradiol has pronounced trophic effects on the developing hippocampus, promoting cell survival and synaptogenesis. In the current study, we investigated the effect of estradiol on GABAA receptor-mediated calcium transients in cultured neonatal hippocampal neurons, from Sprague–Dawley rats, using the calcium sensitive dye, Fura-2-AM. Treatment of hippocampal neurons with physiological levels of estradiol significantly increased the peak amplitude of calcium transients, increased the number of cells responding to the GABAA agonist muscimol with membrane depolarization, and delayed the rate of clearance of free intracellular calcium. These effects were significantly attenuated by pretreatment with the oestrogen receptor antagonist ICI-182,780. This suggests that estradiol, via its action on the oestrogen receptor, prolongs the developmental duration of depolarizing GABA. Estradiol likely maintains GABA-mediated excitation by promoting increased protein levels of the active/phosphorylated form of the chloride cotransporter Na+K+2CL– and L-type voltage sensitive calcium channels containing the α1C subunit. We propose that a component of the trophic effects of estradiol on hippocampal development results from enhanced calcium influx subsequent to GABAA receptor activation.