GABA-modulin, a basic protein that allosterically inhibits the high-affinity binding of GABA to its recognition sites, has been extracted and purified from the synaptosomal fraction of rat brain where it represents approximately 0.5% of the total synaptosomal proteins. GABA-modulin has characteristics in common to the class of highly basic proteins isolated from myelin, in particular to the rat small myelin basic protein (SMBP). However, GABA-modulin is located selectively in synaptosomes, whereas the SMBP is located in myelin. Moreover, synaptosomal GABA-modulin is different from SMBP in amino acid composition (it contains more Glx and Lys and fewer Arg residues) and in apparent molecular weight (17,000 and 15,000 for GABA-modulin and SMBP, respectively). Synaptosomal GABA-modulin fails to bind [3H]muscimol per se but noncompetitively inhibits (IC30 approximately 0.5 microM) the binding of [3H]muscimol to purified synaptic membranes. Cyanogen bromide treatment generated a 13,000 MW major fragment from both SMBP and GABA-modulin. These two fragments were compared and showed differences in amino acid composition and sequence. Moreover, the peptide maps generated from GABA-modulin and SMBP by trypsin and staphylococcal V8 protease digestion are different. The high concentration of GABA-modulin in synaptosomal membranes, its high potency in the inhibition of GABA binding, and its neuronal specificity suggest that GABA-modulin plays an important role in neuronal membrane function linked to the modulation of GABA and perhaps other neurotransmitter receptors.