Axons of dopaminergic neurons innervate the striatum where they contribute to movement and reinforcement learning. Past work has shown that striatal GABA tonically inhibits dopamine release, but whether GABA-A receptors directly modulate transmission or act indirectly through circuit elements is unresolved. Here, we use whole-cell and perforated-patch recordings to test for GABA-A receptors on the main dopaminergic neuron axons and branching processes within the striatum of adult mice. Application of GABA depolarized axons, but also decreased the amplitude of axonal spikes, limited propagation and reduced striatal dopamine release. The mechanism of inhibition involved sodium channel inactivation and shunting. Lastly, we show the positive allosteric modulator diazepam enhanced GABA-A currents on dopaminergic axons and directly inhibited release, but also likely acts by reducing excitation from cholinergic interneurons. Thus, we reveal the mechanisms of GABA-A receptor modulation of dopamine release and provide new insights into the actions of benzodiazepines within the striatum.