Cortical gain regulation allows neurons to respond adaptively to changing inputs. Neural gain is modulated by internal and external influences, including attentional and arousal states, motor activity and neuromodulatory input. These influences converge to a common set of mechanisms for gain modulation, including GABAergic inhibition, synaptically driven fluctuations in membrane potential, changes in cellular conductance and changes in other biophysical neural properties. Recent work has identified GABAergic interneurons as targets of neuromodulatory input and mediators of state-dependent gain modulation. Here, we review the engagement and effects of gain modulation in the cortex. We highlight key recent findings that link phenomenological observations of gain modulation to underlying cellular and circuit-level mechanisms. Finally, we place these cellular and circuit interactions in the larger context of their impact on perception and cognition.