There is substantial evidence that both NMDA receptor (NMDAR) hypofunction and dysfunction of GABAergic neurotransmission contribute to schizophrenia, though the relationship between these pathophysiological processes remains largely unknown. While models using cell-type-specific genetic deletion of NMDARs have been informative, they display overly pronounced phenotypes extending beyond those of schizophrenia. Here, we used the serine racemase knockout (SRKO) mice, a model of reduced NMDAR activity rather than complete receptor elimination, to examine the link between NMDAR hypofunction and decreased GABAergic inhibition. The SRKO mice, in which there is a >90% reduction in the NMDAR co-agonist D-serine, exhibit many of the neurochemical and behavioral abnormalities observed in schizophrenia. We found a significant reduction in inhibitory synapses onto CA1 pyramidal neurons in the SRKO mice. This reduction increases the excitation/inhibition balance resulting in enhanced synaptically-driven neuronal excitability and elevated broad-spectrum oscillatory activity in ex vivo hippocampal slices. Consistently, significant reductions in inhibitory synapse density in CA1 were observed by immunohistochemistry. We further show, using a single-neuron genetic deletion approach, that the loss of GABAergic synapses onto pyramidal neurons observed in the SRKO mice is driven in a cell-autonomous manner following the deletion of SR in individual CA1 pyramidal cells. These results support a model whereby NMDAR hypofunction in pyramidal cells disrupts GABAergic synapse development leading to disrupted feedback inhibition and impaired neuronal synchrony.