We previously reported that ginseng inhibited NMDA receptors in cultured hippocampal neurons. Here, we further examined the detailed mechanism of ginseng-mediated inhibition using its main active ingredient, ginsenoside Rg$_3$. Co-application of ginsenoside Rg$_3$ with increasing concentrations of NMDA did not change the EC$_{50}$ of NMDA to the receptor, suggesting ginsenoside Rg$_3$ inhibits NMDA receptors without competing with the NMDA-binding site. Ginsenoside Rg$_3$-mediated inhibition also occurred in a distinctive manner from the well-characterized NMDA receptor open channel blocker, MK-801, However, ginsenoside Rg$_3$ produced its effect in a glycine concentration-dependent manner and shifted the glycine concentration-response curve to the right without changing the maximal response, suggesting the role of ginsenoside Rg$_3$ as a competitive NMDA receptor antagonist. We also demonstrated that ginsenoside Rg$_3$ significantly protected neurons against NMDA insults. Therefore, these results suggest that ginsenoside Rg$_3$ protects NMDA-induced neuronal death via a competitive interaction with the glycine-binding site of NMDA receptors in cultured hippocampal neurons.