Delayed upregulation of the neuronal chloride extruder KCC2 underlies the progressive shift in GABA signaling polarity during development. Conversely, KCC2 downregulation is observed in a variety of neurological and psychiatric disorders often associated with cognitive impairment. Reduced KCC2 expression and function in mature networks may disrupt GABA signaling and promote anomalous network activities underlying these disorders. However, the causal link between KCC2 downregulation, altered brain rhythmogenesis and cognitive function remains elusive. Here, by combining behavioral exploration with in vivo electrophysiology we assessed the impact of chronic KCC2 downregulation in mouse dorsal hippocampus and showed it compromises both spatial and contextual memory. This was associated with altered hippocampal rhythmogenesis and neuronal hyperexcitability, with increased CA1 pyramidal cell burst firing during non-REM sleep. Reducing neuronal excitability with terbinafine, a specific Task-3 leak potassium channel opener, occluded the impairment of contextual memory upon KCC2 knockdown. Our results establish a causal relationship between KCC2 expression and cognitive performance and suggest that non-epileptiform rhythmopathies and neuronal hyperexcitability are central to the deficits caused by KCC2 downregulation in the adult mouse brain.