Cognitive impairment in schizophrenia (CIAS) is the most critical predictor of functional outcome. Limited understanding of the cellular mechanisms of CIAS hampers development of more effective treatments. We found that in subchronic phencyclidine (scPCP)–treated mice, an animal model that mimics CIAS, the reversal potential of GABAA currents in pyramidal neurons of the infralimbic prefrontal cortex (ILC) shifts from hyperpolarizing to depolarizing, the result of increased expression of the chloride transporter NKCC1. Further, we found that in scPCP mice, the NKCC1 antagonist bumetanide normalizes GABAA current polarity ex vivo and improves performance in multiple cognitive tasks in vivo. This behavioral effect was mimicked by selective, bilateral, NKCC1 knockdown in the ILC. Thus, we show that depolarizing GABAA currents in the ILC contributes to cognitive impairments in scPCP mice and suggest that bumetanide, an FDA-approved drug, has potential to treat or prevent CIAS and other components of the schizophrenia syndrome.