Abstract A finely tuned balance between excitation and inhibition (E/I) is essential for proper brain function. Disruptions in the GABAergic system, which alter this equilibrium, are a common feature in various types of neurological disorders, including Autism Spectrum Disorders (ASDs). Mutations in PTEN, the main negative regulator of the PI3K/Akt pathway, are strongly associated with ASD. However, it is unclear whether PTEN deficiencies can differentially affect inhibitory and excitatory signaling. Using the C. elegans neuromuscular system, where both excitatory (cholinergic) and inhibitory (GABAergic) inputs regulate muscle activity, we found that daf-18 / PTEN mutations specifically impact GABAergic (but not cholinergic) neurodevelopment and function. This selective impact results in a deficiency in inhibitory signaling. The specific defects observed in the GABAergic system in daf-18/PTEN mutants are due to reduced activity of DAF-16/FOXO during development. Ketogenic diets (KGDs) have proven effective for disorders associated with E/I imbalances. However, the mechanisms underlying their action remain largely elusive. We found that a diet enriched with the ketone body β-hydroxybutyrate during early development induces DAF-16/FOXO activity, therefore improving GABAergic neurodevelopment and function in daf-18/PTEN mutants. Our study provides valuable insights into the link between PTEN mutations and neurodevelopmental defects and delves into the mechanisms underlying the potential therapeutic effects of KGDs. Highlights * daf-18/PTEN deficiency in C. elegans results in a specific impairment of inhibitory GABAergic signaling, while the excitatory cholinergic signaling remains unaffected. *The dysfunction of GABAergic neurons in these mutants arises from the inactivity of the transcription factor DAF-16/FOXO during their development, resulting in conspicuous morphological and functional alterations. *A diet enriched with the ketone body β-hydroxybutyrate, which induces DAF-16/FOXO activity, mitigates the functional and morphological defects in the development of GABAergic neurons *β-hydroxybutyrate supplementation during the early stages of development is both necessary and sufficient to achieve these rescuing effects on GABAergic signaling in daf-18/PTEN mutants. Graphical Abstract