All addictive drugs target the mesolimbic dopamine system that originates in the ventral tegmental area (VTA). VTA dopamine neurons project mainly to the nucleus accumbens (NAc), from where inhibitory medium spiny neurons (MSNs) project back to the VTA. Cocaine-evoked synaptic plasticity has been observed in excitatory transmission of the NAc and in the VTA but it remains unknown whether the GABAergic projections from the NAc to the VTA also undergo synaptic plasticity in response to cocaine treatment. Here, we used optogenetic projection targeting to selectively stimulate axons of NAc MSNs to record inhibitory postsynaptic currents (IPSCs) in acute VTA slices. We observed a preferential connectivity of MSNs onto VTA GABA neurons, which was confirmed in vivo. Extracellular single unit recordings in the VTA of anaesthetised mice revealed a strong inhibition of GABA neurons in response to the optogenetic stimulation of MSN terminals. In contrast, dopamine neurons showed increased firing rates in response to light stimulation, confirming a disinhibitory action of MSNs onto dopamine cells. Combining retrograde labeling with attenuated cholera toxine and immunohistochemistry we further show that the MSNs projecting directly to the VTA express D1Rs. We tested whether the synapses between MSNs and VTA GABA neurons undergo synaptic plasticity. A high frequency light stimulation protocol successfully potentiatiated IPSCs in VTA GABA cells by 81 ± 20%. Synaptic potentiation was insensitive to the Ca2+ buffer BAPTA in the postsynaptic cell but was prevented by blocking L-type voltage gated Ca2+ channels, indicating that the potentiation is induced presynaptically. The potentiation was mimicked by the adenylat cyclase activator forskolin, indicating that the cAMP-PKA cascade is involved in the mechanism. Further, using 2-photon imaging of activity induced uptake of the styryl dye FM4-64 at MSN terminals, we show that HFS induced potentiation of MSN-VTA GABA neuron synapses is expressed by an increased number of active release sites. We then treated mice with five daily cocaine injections and observed that HFS and forskolin were no longer able to induce inhibitory potentiation ex vivo 24 hours after the last injection. In accordance with an occlusion scenario, we observed paired pulse depression of light evoked IPSCs after cocaine treatment, indicative of increased GABA release at MSN-VTA GABA neuron synapses. Our data suggest that cocaine potentiates inhibitory transmission of D1-MSNs onto VTA GABA neurons via a PKA dependent mechanism. Taken together, these results suggest that cocaine may disinhibit VTA dopamine neurons by increasing GABA release onto VTA GABA neurons.