The aim of this study was to evaluate the effects of cocaine on γ-aminobutyric acid (GABA) and dopamine (DA) neurons in the ventral tegmental area (VTA). Utilizing single-unit recordings in vivo, microelectrophoretic administration of DA enhanced the firing rate of VTA GABA neurons via D2/D3 DA receptor activation. Lower doses of intravenous cocaine (0.25–0.5 mg/kg), or the DA transporter (DAT) blocker methamphetamine, enhanced VTA GABA neuron firing rate via D2/D3 receptor activation. Higher doses of cocaine (1.0–2.0 mg/kg) inhibited their firing rate, which was not sensitive to the D2/D3 antagonist eticlopride. The voltage-sensitive sodium channel (VSSC) blocker lidocaine inhibited the firing rate of VTA GABA neurons at all doses tested (0.25–2.0 mg/kg). Cocaine or lidocaine reduced VTA GABA neuron spike discharges induced by stimulation of the internal capsule (ICPSDs) at dose levels 0.25–2 mg/kg (IC50 1.2 mg/kg). There was no effect of DA or methamphetamine on ICPSDs, or of DA antagonists on cocaine inhibition of ICPSDs. In VTA GABA neurons in vitro, cocaine reduced (IC50 13 μm) current-evoked spikes and TTX-sensitive sodium currents in a use-dependent manner. In VTA DA neurons, cocaine reduced IPSCs (IC50 13 μm), increased IPSC paired-pulse facilitation and decreased spontaneous IPSC frequency, without affecting miniature IPSC frequency or amplitude. These findings suggest that cocaine acts on GABA neurons to reduce activity-dependent GABA release on DA neurons in the VTA, and that cocaine’s use-dependent blockade of VTA GABA neuron VSSCs may synergize with its DAT inhibiting properties to enhance mesolimbic DA transmission implicated in cocaine reinforcement.