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Abstract Ketamine is a dissociative anesthetic drug, which has more recently emerged as a rapid-acting antidepressant. When acutely administered at subanesthetic doses, ketamine causes cognitive deficits like those observed in patients with schizophrenia, including impaired working memory. Although these effects have been linked to ketamine’s action as an N-methyl-D-aspartate receptor antagonist, it is unclear how synaptic alterations translate into changes in brain microcircuit function that ultimately influence cognition. Here, we administered ketamine to rhesus monkeys during a spatial working memory task set in a naturalistic virtual environment. Ketamine induced transient working memory deficits while sparing perceptual and motor skills. Working memory deficits were accompanied by decreased responses of fast spiking inhibitory interneurons and increased responses of broad spiking excitatory neurons in the lateral prefrontal cortex. This translated into a decrease in neuronal tuning and information encoded by neuronal populations about remembered locations. Our results demonstrate that ketamine differentially affects neuronal types in the neocortex; thus, it perturbs the excitation inhibition balance within prefrontal microcircuits and ultimately leads to selective working memory deficits.