The release of neurotransmitter via the fusion of transmitter-filled, presynaptic vesicles is the primary means by which neurons relay information. However, little is known regarding the molecular mechanisms that supply neurotransmitter destined for vesicle filling, the endogenous transmitter concentrations inside presynaptic nerve terminals or the dynamics of vesicle refilling after exocytosis. We addressed these issues by recording from synaptically-coupled pairs of glycine/GABA co-releasing interneurons (cartwheel cells) of the mouse dorsal cochlear nucleus. We find that the plasma membrane transporter GlyT2 and the intracellular enzyme glutamate decarboxylase supply the majority of glycine and GABA, respectively. Pharmacological block of GlyT2 or glutamate decarboxylase led to rapid and complete rundown of transmission, whereas increasing GABA synthesis via intracellular glutamate uncaging dramatically potentiated GABA release within one minute. These effects were surprisingly independent of exocytosis, indicating that pre-filled vesicles re-equilibrated upon acute changes in cytosolic transmitter. Titration of cytosolic transmitter with postsynaptic responses indicated that endogenous, non-vesicular glycine/GABA levels in nerve terminals are 5 to 7 mM, and that vesicular transport mechanisms are not saturated under basal conditions. Thus, cytosolic transmitter levels dynamically set the strength of inhibitory synapses in a release-independent manner.