The neurotrophin brain-derived neurotrophic factor (BDNF) is a potent regulator of inhibitory synaptic transmission, although the locus of this effect and the underlying mechanisms are controversial. We explored a potential interaction between BDNF and endogenous cannabinoid (endocannabinoid) signaling because activation of type 1 cannabinoid (CB1) receptors potently regulates γ-aminobutyric acid (GABA) release and both trkB tyrosine kinase receptors and CB1 receptors are highly expressed at synapses in neocortical layer 2/3. Here, we found that the effects of BDNF at inhibitory cortical synapses are mediated by the release of endocannabinoids acting retrogradely at presynaptic CB1 receptors. Specifically, acute application of BDNF rapidly reduced the amplitude of inhibitory postsynaptic currents (IPSCs) via postsynaptic trkB receptor activation because intracellular delivery of the tyrosine kinase inhibitor K252a completely blocked the BDNF effect. Although triggered by postsynaptic trkB activation, BDNF exposure decreased presynaptic release probability, as evidenced by increases in the paired-pulse ratio and coefficient of variation of evoked responses. In addition, BDNF decreased the frequency but not the amplitude of action potential-independent miniature IPSCs and BDNF did not alter the postsynaptic response to locally applied GABA. These results suggest that BDNF induces the release of a retrograde messenger from the postsynaptic cell that regulates presynaptic neurotransmitter release. Consistent with a role for endocannabinoids as the retrograde signal, the effect of BDNF on IPSCs was blocked by CB1 receptor antagonists and was occluded by a cannabinoid receptor agonist. Furthermore, inhibiting endocannabinoid synthesis or transport also disrupted the BDNF effect, implicating postsynaptic endocannabinoid release triggered by BDNF.