Drugs that enhance synaptic gamma-aminobutyric acid (GABA)ergic neurotransmission are widely utilized in the clinical setting. Barbiturates and benzodiazepine receptor agonists, for example, both potentiate an inhibitory chloride conductance through GABA-gated channels, and thereby achieve their sedative-hypnotic effects. The primary locus of action of these agents, and indeed most neuroactive drugs, is the postsynaptic junction. By contrast, gaboxadol, a selective extrasynaptic GABA receptor agonist and late-stage investigational treatment for insomnia, acts on a unique delta-containing GABAA receptor subtype found exclusively outside of the synapse. Although the mechanistic details of extrasynaptic neurotransmission remain to be fully established, it is now clear that these receptors demonstrate unique pharmacological, biophysical and electrophysiological properties. Importantly, the delta-containing GABAA receptor subtype activated by gaboxadol is highly expressed in the thalamus, where it might behave as a 'gain control' (independently controlling the strength of signals) in the corticothalamic pathways that govern sleep-relevant neuronal oscillations. This unique mechanism has contributed to our increased understanding of sleep mechanisms, and targeting of this system offers potential advantages over existing insomnia treatments.