ABSTRACT γ-Aminobutyric acid (GABA) is a potent bioactive compound, which has immense market demand due to its important physiological functions and positive health effects which aid in treatment or prevention of many diseases. The main physiological effects of GABA include neuronal modulation to improve nervous system disorders, regulation of anxiety, sleeplessness, mood disorders, protection against hypertension, diabetes, nephrotoxicity and cancer. It is most commonly produced via decarboxylation of glutamate by glutamic acid decarboxylase and this pathway is operational ubiquitously in plants, microbes and humans. However, lactic acid bacteria (LAB) have emerged as the efficient clade for GABA production and is most widely used for producing GABA-enriched products by fermentation. The present review addresses the importance of GABA as a therapeutic target as well as nutraceutical for providing various health benefits. The aspects related to its production by microbial fermentation have been elaborately discussed. Further, its newly emerged role as C4-platform chemical for production of bioplastics has been encompassed in its novel applications.