The polyherbal formulation, PH-1, containing fresh aqueous extracts of Valeriana and, Boswellia spp. as major constituents and, Plumbago, Acorus spp. as minor constituents was investigated to explore the anti-anxiolytic activity and, its mode of action through competitive GABA receptor bindings with different antagonists of known nature e.g., flumazenil, picrotoxin and bicuculine. The open field, staircase test and, mirror chamber tests of animal models of anxiety were employed at 100, 200, 400 and 800 mg/kg dose levels. The formulation exhibited significant dose dependent anxiolytic activity through oral administration for varying periods of time in different paradigms of increased time-spent in mirror chamber, in central platform of open filed and, the enhanced climbing of steps in staircase tests. The 200 and, 400 mg/kg doses were highly effective. The formulation seems to be acting through GABAA-benzodiazepine binding site as evident from the blockage of PH-1 action at 400 mg/kg dose level by the flumazenil, a known GABAA-benzodiazepine receptor antagonist, and, picrotoxin, a known GABAA receptor-chloride channel complex antagonist. However, the blockade of anxiolytic activity by bicuculine through GABAA-GABA binding receptor antagonist was not significant which also confirmed the mode of action through activation of benzodiazepine receptor and, facilitation of benzodiazepine interdependent chloride channel complex.