In the spinal cord dorsal horn, excitatory sensory fibers terminate adjacent to interneuron terminals. Here, we show that kainate (KA) receptor activation triggered action potential-independent release of GABA and glycine from dorsal horn interneurons. This release was transient, because KA receptors desensitized, and it required Na+ entry and Ca2+ channel activation. KA modulated evoked inhibitory transmission in a dose-dependent, biphasic manner, with suppression being more prominent. In recordings from isolated neuron pairs, this suppression required GABAB receptor activation, suggesting that KA-triggered GABA release activated presynaptic GABAB autoreceptors. Finally, glutamate released from sensory fibers caused a KA and GABAB receptor-dependent suppression of inhibitory transmission in spinal slices. Thus, we show how presynaptic KA receptors are linked to changes in GABA/glycine release and highlight a novel role for these receptors in regulating sensory transmission.