Amyloid plaques and tau tangles are common pathological hallmarks for Alzheimer’s disease (AD); however, reducing Aβ production failed to relieve the symptoms of AD patients. Here we report a high GABA (γ-aminobutyric acid) content in reactive astrocytes in the dentate gyrus (DG) of a mouse model for AD (5xFAD) that results in increased tonic inhibition and memory deficit. We also confirm in human AD patient brains that dentate astrocytes have a high GABA content, suggesting that high astrocytic GABA level may be a novel biomarker and a potential diagnostic tool for AD. The excessive GABA in 5xFAD astrocytes is released through an astrocyte-specific GABA transporter GAT3/4, and significantly enhances tonic GABA inhibition in dentate granule cells. Importantly, reducing tonic inhibition in 5xFAD mice rescues the impairment of long-term potentiation (LTP) and memory deficit. Thus, reducing tonic GABA inhibition in the DG may lead to a novel therapy for AD.