GABAA receptors are the major inhibitory neurotransmitter receptors in the brain and are the target for many clinically important drugs such as the benzodiazepines. Benzodiazepines act at the high-affinity binding site at the α+/γ− subunit interface. Previously, an additional low affinity binding site for diazepam located in the transmembrane (TM) domain has been described. The compound SJM-3 was recently identified in a prospective screening of ligands for the benzodiazepine binding site and investigated for its site of action. We determined the binding properties of SJM-3 at GABAA receptors recombinantly expressed in HEK-cells using radioactive ligand binding assays. Impact on function was assessed in Xenopus laevis oocytes with electrophysiological experiments using the two-electrode voltage clamp method. SJM-3 was shown to act as an antagonist at the α+/γ− site. At the same time it strongly potentiated GABA currents via the binding site for diazepam in the transmembrane domain. Mutation of a residue in M2 of the α subunit strongly reduced receptor modulation by SJM-3 and a homologous mutation in the β subunit abolished potentiation. SJM-3 acts as a more efficient modulator than diazepam at the site in the trans-membrane domain. In contrast to low concentrations of benzodiazepines, SJM-3 modulates both synaptic and extrasynaptic receptors. A detailed exploration of the membrane site may provide the basis for the design and identification of subtype-selective modulatory drugs.