Within the hippocampus and neocortex, GABA is considered to be excitatory in early development due to a relatively depolarized Cl− reversal potential (ECl). Although the depolarizing nature of synaptic GABAergic events has been well established, it is unknown whether cortical tonic currents mediated by extrasynaptically located GABAA receptors (GABAARs) are also excitatory. Here we examined the development of tonic currents in the neocortex and their effect on neuronal excitability. Mean tonic current, recorded from layer 5 (L5) pyramidal cells of the mouse somatosensory cortex, is robust in newborns [postnatal day (P)2–4] then decreases dramatically by the second postnatal week (P7–10 and P30–40). Pharmacological studies, in combination with Western blot analysis, show that neonatal tonic currents are partially mediated by the GABAAR α5 subunit, and probably the δ subunit. In newborns, the charge due to tonic current accounts for nearly 100% of the total GABA charge, a contribution that decreases to < 50% in mature tissue. Current clamp recordings show that tonic current contributes to large fluctuations in the membrane potential that may disrupt its stability. Bath application of 5 μM GABA, to induce tonic currents, markedly decreased cell firing frequency in most recorded cells while increasing it in others. Gramicidin perforated patch recordings show heterogeneity in ECl recorded from P2–5 L5 pyramidal cells. Together, these findings demonstrate that tonic currents activated by low GABA concentrations can dominate GABAergic transmission in newborn neocortical pyramidal cells and that tonic currents can exert heterogeneous effects on neuronal excitability.