Recurrent axon collaterals are a major means of communication between spiny projection neurons (SPNs) in the striatum and profoundly affect the function of the basal ganglia. However, little is known about the molecular and cellular mechanisms that underlie this communication. We show that intrastriatal nitric oxide (NO) signaling elevates the expression of the vesicular GABA transporter (VGAT) within recurrent collaterals of SPNs. Down-regulation of striatal NO signaling resulted in an attenuation of GABAergic signaling in SPN local collaterals, down-regulation of VGAT expression in local processes of SPNs, and impaired motor behavior. PKG1 and cAMP response element-binding protein are involved in the signal transduction that transcriptionally regulates VGAT by NO. These data suggest that transcriptional control of the vesicular GABA transporter by NO regulates GABA transmission and action selection.