Mounting evidence indicates that ethanol (EtOH) exposure activates neuroimmune signaling. Alterations in pro-inflammatory cytokines after acute and chronic EtOH exposure have been heavily investigated. In contrast, little is known about the regulation of neurotransmission and/or modulation by anti-inflammatory cytokines in the brain after an acute EtOH exposure. Recent evidence suggests that interleukin-10 (IL-10), an anti-inflammatory cytokine, is upregulated during withdrawal from chronic EtOH exposure. In the present study, we show that IL-10 is increased early (1 h) after a single intoxicating dose of EtOH (5 g/kg, intragastric) in Sprague Dawley rats. We also show that IL-10 rapidly regulates GABAergic transmission in dentate gyrus neurons. In brain slice recordings, IL-10 application dose-dependently decreases miniature inhibitory postsynaptic current (mIPSC) area and frequency, and decreases the magnitude of the picrotoxin sensitive tonic current (Itonic), indicating both pre- and postsynaptic mechanisms. A PI3K inhibitor LY294002 (but not the negative control LY303511) ablated the inhibitory effects of IL-10 on mIPSC area and Itonic, but not on mIPSC frequency, indicating the involvement of PI3K in postsynaptic effects of IL-10 on GABAergic transmission. Lastly, we also identify a novel neurobehavioral regulation of EtOH sensitivity by IL-10, whereby IL-10 attenuates acute EtOH-induced hypnosis. These results suggest that EtOH causes an early release of IL-10 in the brain, which may contribute to neuronal hyperexcitability as well as disturbed sleep seen after binge exposure to EtOH. These results also identify IL-10 signaling as a potential therapeutic target in alcohol-use disorders and other CNS disorders where GABAergic transmission is altered.