Cannabidiol (CBD) is a major non-intoxicating component of cannabis and possesses anti-epileptic, anxiolytic and anti-hyperalgesic properties. The mechanism of action of CBD in producing such effects remains unclear. Despite evidence that some endogenous and synthetic cannabinoids interact with GABAA receptors, no-one has yet investigated the effects of CBD. Here we used two-electrode voltage clamp electrophysiology to compare the actions of CBD with those of the major central endocannabinoid, 2-arachidonoyl glycerol (2-AG) on human recombinant GABAA receptors (synaptic α1-6βg2 and extrasynaptic α4β2δ) expressed on Xenopus oocytes. CBD and 2-AG were positive allosteric modulators at α1-6βγ2 receptors, with low micromolar potencies. The maximal level of enhancement seen with either CBD or 2-AG were on α2-containing GABAA receptor subtypes, with approximately a 4-fold enhancement of the GABA EC5 evoked current, more than twice the potentiation seen with other α-subunit receptor combinations. Further we observed β-subunit selectivity, whereby modulatory activity was higher at β2/β3 over β1 subunits. The β1-subunit homologous mutant β2(V436T) substantially diminished the efficacy of both drugs to a third of that obtained with wild-type β2 subunit combinations, but without changing potency. The potency of CBD increased and efficacy preserved in binary α1/α2β2 receptors indicating that their effects do not involve the classic benzodiazepine site. Exploration of extrasynaptic α4β2δ receptors revealed that both compounds enhanced GABA EC5 evoked currents at concentrations ranging from 0.01–1 μM. Taken together these results reveal a mode of action of CBD on specifically configured GABAA receptors that may be relevant to the anticonvulsant and anxiolytic effects of the compound.