Principal neurons encode information by varying their firing rate and patterns precisely fine-tuned through GABAergic interneurons. Dysregulation of inhibition can lead to neuropsychiatric disorders, yet little is known about the molecular basis underlying inhibitory control. Here, we find that excessive GABA release from basket cells (BCs) attenuates the firing frequency of Purkinje neurons (PNs) in the cerebellum of Fragile X Mental Retardation 1 (Fmr1) knockout (KO) mice, a model of Fragile X Syndrome (FXS) with abrogated expression of the Fragile X Mental Retardation Protein (FMRP). This over-inhibition originates from increased excitability and Ca2+ transients in the presynaptic terminals, where Kv1.2 potassium channels are downregulated. By paired patch-clamp recordings, we further demonstrate that acutely introducing an N-terminal fragment of FMRP into BCs normalizes GABA release in the Fmr1-KO synapses. Conversely, direct injection of an inhibitory FMRP antibody into BCs, or membrane depolarization of BCs, enhances GABA release in the wild type synapses, leading to abnormal inhibitory transmission comparable to the Fmr1-KO neurons. We discover that the N-terminus of FMRP directly binds to a phosphorylated serine motif on the C-terminus of Kv1.2; and that loss of this interaction in BCs exaggerates GABA release, compromising the firing activity of PNs and thus the output from the cerebellar circuitry. An allosteric Kv1.2 agonist, docosahexaenoic acid, rectifies the dysregulated inhibition in vitro as well as acoustic startle reflex and social interaction in vivo of the Fmr1-KO mice. Our results unravel a novel molecular locus for targeted intervention of FXS and perhaps autism.