The mechanisms that regulate the strength of synaptic transmission and intrinsic neuronal excitability are well characterized; however, the mechanisms that promote disease-causing neural network dysfunction are poorly defined. We generated mice with targeted neuron type-specific expression of a gain-of-function variant of the neurotransmitter receptor for glycine (GlyR) that is found in hippocampectomies from patients with temporal lobe epilepsy. In this mouse model, targeted expression of gain-of-function GlyR in terminals of glutamatergic cells or in parvalbumin-positive interneurons persistently altered neural network excitability. The increased network excitability associated with gain-of-function GlyR expression in glutamatergic neurons resulted in recurrent epileptiform discharge, which provoked cognitive dysfunction and memory deficits without affecting bidirectional synaptic plasticity. In contrast, decreased network excitability due to gain-of-function GlyR expression in parvalbumin-positive interneurons resulted in an anxiety phenotype, but did not affect cognitive performance or discriminative associative memory. Our animal model unveils neuron type-specific effects on cognition, formation of discriminative associative memory, and emotional behavior in vivo. Furthermore, our data identify a presynaptic disease-causing molecular mechanism that impairs homeostatic regulation of neural network excitability and triggers neuropsychiatric symptoms.