In a mouse model of temporal lobe epilepsy, multicellular calcium imaging revealed that disease emergence was accompanied by massive amplification in the normally sparse, afferent stimulation-induced activation of hippocampal dentate granule cells. Patch recordings demonstrated reductions in local inhibitory function within the dentate gyrus at time points where sparse activation was compromised. Mimicking changes in inhibitory synaptic function and transmembrane chloride regulation was sufficient to elicit the dentate gyrus circuit collapse evident during epilepsy development. Pharmacological blockade of outward chloride transport had no effect during epilepsy development, and significantly increased granule cell activation in both control and chronically epileptic animals. This apparent occlusion effect implicates reduction in chloride extrusion as a mechanism contributing to granule cell hyperactivation specifically during early epilepsy development. Glutamine plays a significant role in local synthesis of GABA in synapses. In epileptic mice, sparse granule cell activation could be restored by glutamine application, implicating compromised GABA synthesis. Glutamine had no effect on granule cell activation earlier, during epilepsy development. We conclude that compromised feedforward inhibition within the local circuit generates the massive dentate gyrus circuit hyperactivation evident in animals during and following epilepsy development. However, the mechanisms underlying this disinhibition diverge significantly as epilepsy progresses.