Neuregulin-1 (NRG1) gene variants are associated with increased genetic risk for schizophrenia. It is unclear whether risk haplotypes cause elevated ordecreased expression of NRG1 in the brains of schizophrenia patients, given that both findings have been reported from autopsy studies. To study NRG1 functions invivo, we generated mouse mutants with reduced and elevated NRG1 levels and analyzed the impact on cortical functions. Loss of NRG1 from cortical projection neurons resulted in increased inhibitory neurotransmission, reduced synaptic plasticity, and hypoactivity. Neuronal overexpression of cysteine-rich domain (CRD)-NRG1, the major brain isoform, caused unbalanced excitatory-inhibitory neurotransmission, reduced synaptic plasticity, abnormal spine growth, altered steady-state levels of synaptic plasticity-related proteins, and impaired sensorimotor gating. We conclude that an "optimal" level of NRG1 signaling balances excitatory and inhibitory neurotransmission in the cortex. 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