Basolateral amygdala (BLA) and medial prefrontal cortex (mPFC) interactions have been implicated in cue-elicited craving and drug seeking. However, the neurochemical mechanisms underlying drug/environment associations are ill-defined. We used in vivo microdialysis and pharmacological inactivation techniques to identify alterations in mPFC glutamate (GLU) and gamma-aminobutyric acid (GABA) transmission in response to cues previously associated with experimenter-administered cocaine (COC) and the BLA contribution to these effects. Rats received alternate day injections of COC and saline (SAL) paired with a distinct environment for 6 days. Behavioral, neurochemical and immunohistochemical studies were conducted, in drug-free animals, 24 h after the last conditioning session. Animals exposed to a COC-paired environment demonstrated an augmented locomotor activity (LMA) relative to those exposed to the SAL-paired environment. mPFC GABA neurotransmission in the COC-paired environment was significantly increased, whereas GLU overflow was unaltered. Dual labeling of cFos and glutamic acid decarboxylase 67 immunoreactivity in mPFC neurons revealed significantly greater colocalization of these proteins following exposure to the COC-associated environment (CAE) relative to pseudo-conditioned rats or rats exposed to the SAL-associated environment indicating that the conditioned neurochemical response to the COC-paired environment is associated with activation of intrinsic mPFC GABA neurons. BLA inactivation prevented the increase in LMA and the augmentation of mPFC GABA transmission produced by cue exposure. Intra-mPFC application of the AMPA/KA receptor antagonist, NBQX, produced similar effects. These findings indicate that exposure to a CAE increases mPFC GABA transmission by enhancing excitatory drive from the BLA and activation of AMPA/KA receptors on mPFC GABA neurons.