Chronic pain is debilitating disorder in which the underlying pathophysiology is still unknown. Impaired cortical inhibition is one mechanism that is associated with chronic pain. Cortical inhibition refers to a neurophysiological process in which gamma-aminobutyric acid (GABA) inhibitory interneurons selectively attenuate the activity of pyramidal neurons in the cortex. Previous studies have capitalized on the ability of transcranial magnetic stimulation (TMS) to index cortical inhibition by stimulating the motor cortex and measuring the resulting peripheral motor evoked potentials with electromyography. Chronic pain has been shown to induce changes in cortical inhibition within the motor cortex using TMS. Electroencephalography (EEG) studies also demonstrate that gamma (30-50 Hz) oscillations in the prefrontal and somatosensory cortex are associated with the experience of pain. As gamma oscillations are mediated by GABA, the combination of TMS with EEG allows for the examination of the relationship between cortical inhibition, gamma and chronic pain. In this paper, we summarize the evidence of impaired GABAergic and gamma oscillations in chronic pain patients. We then demonstrate TMS-EEG as a reliable method in which to record cortical inhibition directly from the prefrontal cortex to examine the modulatory effect of GABAB receptor inhibition on cortical oscillations. Finally, the modulation of GABA and gamma oscillations with repetitive TMS will be suggested as the possible mechanism through which rTMS exerts its therapeutic effects in the treatment of pain. The aim of this paper, therefore, is to present the TMS-EEG as a potential method through which to better classify, diagnose and treat chronic pain.