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Monitoring GABAergic inhibition in the nervous system has been enabled by development of an intensiometric molecular sensor that directly detects GABA. However, the first generation iGABASnFR exhibits low signal-to-noise and suboptimal kinetics, making in vivo experiments challenging. To improve sensor performance, we targeted several sites in the protein for near-saturation mutagenesis and evaluated the resulting sensor variants in a high throughput screening system using evoked synaptic release in primary cultured neurons. This identified a sensor variant, iGABASnFR2, with 4.2-fold improved sensitivity and 20% faster kinetics, and binding affinity that remained in a range sensitive to changes in GABA concentration at synapses. We also identified sensors with an inverted response, decreasing fluorescence intensity upon GABA binding. We termed the best such negative-going sensor iGABASnFR2n, which can be used to corroborate observations with the positive-going sensor. These improvements yielded a qualitative enhancement of in vivo performance when compared directly to the original sensor. iGABASnFR2 enabled the first measurements of direction-selective GABA release in the retina. In vivo imaging in somatosensory cortex revealed that iGABASnFR2 can report volume-transmitted GABA release following whisker stimulation. Overall, the improved sensitivity and kinetics of iGABASnFR2 make it a more effective tool for imaging GABAergic transmission in intact neural circuits.