The neuregulin receptor ErbB4 is an important modulator of GABAergic interneurons and neural network synchronization. However, little is known about the endogenous ligands that engage ErbB4, the neural processes that activate them or their direct downstream targets. Here we demonstrate, in cultured neurons and in acute slices, that the NMDA receptor is both effector and target of neuregulin 2 (NRG2)/ErbB4 signalling in cortical interneurons. Interneurons co-express ErbB4 and NRG2, and pro-NRG2 accumulates on cell bodies atop subsurface cisternae. NMDA receptor activation rapidly triggers shedding of the signalling-competent NRG2 extracellular domain. In turn, NRG2 promotes ErbB4 association with GluN2B-containing NMDA receptors, followed by rapid internalization of surface receptors and potent downregulation of NMDA but not AMPA receptor currents. These effects occur selectively in ErbB4-positive interneurons and not in ErbB4-negative pyramidal neurons. Our findings reveal an intimate reciprocal relationship between ErbB4 and NMDA receptors with possible implications for the modulation of cortical microcircuits associated with cognitive deficits in psychiatric disorders.