GABA is the primary inhibitory neurotransmitter. Membrane currents evoked by GABA(A) receptor activation have uniquely small driving forces: their reversal potential (E(GABA)) is very close to the resting membrane potential. As a consequence, GABA(A) currents can flow in either direction, depending on both the membrane potential and the local intra and extracellular concentrations of the primary permeant ion, chloride (Cl). Local cytoplasmic Cl concentrations vary widely because of displacement of mobile Cl ions by relatively immobile anions. Here, we use new reporters of extracellular chloride (Cl(-) (o)) to demonstrate that Cl is displaced in the extracellular space by high and spatially heterogenous concentrations of immobile anions including sulfated glycosaminoglycans (sGAGs). Cl(-) (o) varies widely, and the mean Cl(-) (o) is only half the canonical concentration (i.e. the Cl concentration in the cerebrospinal fluid). These unexpectedly low and heterogenous Cl(-) (o) domains provide a mechanism to link the varied but highly stable distribution of sGAGs and other immobile anions in the brain's extracellular space to neuronal signal processing via the effects on the amplitude and direction of GABA(A) transmembrane Cl currents. KEY POINTS: Extracellular chloride concentrations in the brain were measured using a new chloride-sensitive organic fluorophore and two-photon fluorescence lifetime imaging. In vivo, the extracellular chloride concentration was spatially heterogenous and only half of the cerebrospinal fluid chloride concentration Stable displacement of extracellular chloride by immobile extracellular anions was responsible for the low extracellular chloride concentration The changes in extracellular chloride were of sufficient magnitude to alter the conductance and reversal potential of GABA(A) chloride currents The stability of the extracellular matrix, the impact of the component immobile anions, including sulfated glycosaminoglycans on extracellular chloride concentrations, and the consequent effect on GABA(A) signalling suggests a previously unappreciated mechanism for modulating GABA(A) signalling.