The 40 Hz auditory steady-state response (ASSR), an oscillatory brain response to periodically modulated auditory stimuli, is a promising, noninvasive physiological biomarker for schizophrenia and related neuropsychiatric disorders. The 40 Hz ASSR might be amplified by synaptic interactions in cortical circuits, which are, in turn, disturbed in neuropsychiatric disorders. Here, we tested whether the 40 Hz ASSR in the human auditory cortex depends on two key synaptic components of neuronal interactions within cortical circuits: excitation via N-methyl-aspartate glutamate (NMDA) receptors and inhibition via gamma-amino-butyric acid (GABA) receptors. We combined magnetoencephalography (MEG) recordings with placebo-controlled, low-dose pharmacological interventions in the same healthy human participants (13 males, 7 females). All participants exhibited a robust 40 Hz ASSR in auditory cortices, especially in the right hemisphere, under a placebo. The GABAA receptor-agonist lorazepam increased the amplitude of the 40 Hz ASSR, while no effect was detectable under the NMDA blocker memantine. Our findings indicate that the 40 Hz ASSR in the auditory cortex involves synaptic (and likely intracortical) inhibition via the GABAA receptor, thus highlighting its utility as a mechanistic signature of cortical circuit dysfunctions involving GABAergic inhibition.