NMDA receptors are ligand-gated ion channels that mediate excitatory neurotransmission in the brain and are involved in numerous neuropathological conditions. NMDA receptors are activated upon simultaneous binding of coagonists glycine and glutamate to the GluN1 and GluN2 subunits, respectively. Subunit-selective modulation of NMDA receptor function by ligand binding to modulatory sites distinct from the agonist binding sites could allow pharmacological intervention with therapeutically beneficial mechanisms. Here, we show the mechanism of action for 3-chloro-4-fluoro-N-[(4-[(2-(phenylcarbonyl)hydrazino)carbonyl]phenyl)methyl]-benzenesulfonamide (TCN-201), a new GluN1/GluN2A-selective NMDA receptor antagonist whose inhibition can be surmounted by glycine. Electrophysiological recordings from chimeric and mutant rat NMDA receptors suggest that TCN-201 binds to a novel allosteric site located at the dimer interface between the GluN1 and GluN2 agonist binding domains. Furthermore, we demonstrate that occupancy of this site by TCN-201 inhibits NMDA receptor function by reducing glycine potency. TCN-201 is therefore a negative allosteric modulator of glycine binding.