The correct balance between excitation and inhibition is crucial for brain function and disrupted in several pathological conditions. Excitatory neuronal circuits in the primary somatosensory cortex (S1) are modulated by local inhibitory neurons with the balance of this excitatory and inhibitory activity important for function. The activity of excitatory layer 2/3 neurons (L2/3) in the S1 cortex is increased in chronic pain, but it is not known how the local interneurons, nor the balance between excitation and inhibition, may change in chronic pain. Usingin vivotwo-photon calcium imaging and electrophysiology, we report here that the response of L2/3 local inhibitory neurons to both sensory stimulation and to layer 4 electrical stimulation increases in inflammatory chronic pain. Local application into L2/3 of a GABA_Areceptor blocker further enhanced the activity of S1 excitatory neurons and reduced pain thresholds, whereas local application of the GABA_Areceptor modulators (muscimol and diazepam) transiently alleviated the allodynia. This illustrates the importance of the local inhibitory pathways in chronic pain sensation. A reduction in the expression and function of the potassium–chloride cotransporter 2 occurred during chronic pain, which reduces the efficacy of the inhibitory inputs to L2/3 excitatory neurons. In summary, both excitatory and inhibitory neuronal activities in the S1 are enhanced in the chronic pain model, but the increased inhibition is insufficient to completely counterbalance the increased excitation and alleviate the symptoms of chronic pain.