The tight balance between synaptic excitation and inhibition (E/I) within neocortical circuits in the mammalian brain is important for complex behavior. Many loss-of-function studies have demonstrated that brain-derived neurotrophic factor (BDNF) and its cognate receptor tropomyosin receptor kinase B (TrkB) are essential for the development of inhibitory GABAergic neurons. However, behavioral consequences of impaired BDNF/TrkB signaling in GABAergic neurons remain unclear, largely due to confounding motor function deficits observed in previous animal models. In this study, we generated conditional knockout mice (TrkB cKO) in which TrkB was ablated from a majority of corticolimbic GABAergic interneurons postnatally. These mice showed intact motor coordination and movement, but exhibited enhanced dominance over other mice in a group-housed setting. In addition, immature fast-spiking GABAergic neurons of TrkB cKO mice resulted in an E/I imbalance in layer 5 microcircuits within the medial prefrontal cortex (mPFC), a key region regulating social dominance. Restoring the E/I imbalance via optogenetic modulation in the mPFC of TrkB cKO mice normalized their social dominance behavior. Taken together, our results provide strong evidence for a role of BDNF/TrkB signaling in inhibitory synaptic modulation and social dominance behavior in mice.