The proper development and function of telencephalic GABAergic interneurons is critical for maintaining the excitation and inhibition (E/I) balance in cortical circuits. Glutamate contributes to cortical interneuron (CIN) development via N-methyl-D-aspartate receptors (NMDARs). NMDAR activation requires the binding of a co-agonist, either glycine or D-serine. D-serine (co-agonist at many mature forebrain synapses) is racemized by the neuronal enzyme serine racemase (SR) from L-serine. We utilized constitutive SR knockout (SR^-/-) mice to investigate the effect of D-serine availability on the development of CINs and inhibitory synapses in the prelimbic cortex (PrL). We found that most immature Lhx6 + CINs expressed SR and the obligatory NMDAR subunit NR1. At embryonic day 15, SR^-/- mice had an accumulation of GABA and increased mitotic proliferation in the ganglionic eminence and fewer Gad1 + (glutamic acid decarboxylase 67 kDa; GAD67) cells in the E18 neocortex. Lhx6 + cells develop into parvalbumin (PV+) and somatostatin (Sst+) CINs. In the PrL of postnatal day (PND) 16 SR^-/- mice, there was a significant decrease in GAD67+ and PV+, but not SST + CIN density, which was associated with reduced inhibitory postsynaptic potentials in layer 2/3 pyramidal neurons. These results demonstrate that D-serine availability is essential for prenatal CIN development and postnatal cortical circuit maturation.