Gamma-aminobutyric acid (GABA) is synthesized by two isoforms of the pyridoxal 5'-phosphate-dependent enzyme glutamic acid decarboxylase (GAD65 and GAD67). GAD67 is constitutively active and is responsible for basal GABA production. In contrast, GAD65, an autoantigen in type I diabetes, is transiently activated in response to the demand for extra GABA in neurotransmission, and cycles between an active holo form and an inactive apo form. We have determined the crystal structures of N-terminal truncations of both GAD isoforms. The structure of GAD67 shows a tethered loop covering the active site, providing a catalytic environment that sustains GABA production. In contrast, the same catalytic loop is inherently mobile in GAD65. Kinetic studies suggest that mobility in the catalytic loop promotes a side reaction that results in cofactor release and GAD65 autoinactivation. These data reveal the molecular basis for regulation of GABA homeostasis.