Serotonin is a critical regulator of cortical neurodevelopment whose perturbation is associated with neurodevelopmental disorders. Here, we explore its neurodevelopmental dynamics and how they dictate the emergence of cortical population dynamics by combining longitudinal multiphoton imaging of serotonin and calcium sensors with slice electrophysiology in the somatosensory cortex of interneuron-labelled mice with a genetic (knock-out), or pharmacological (postnatal fluoxetine) developmental disruption of serotonin dynamics. We have characterised global and local cortical serotonergic fluctuations across development as a function of stimulus valence, behavioural state and SERT function. We report that early SERT expression in thalamic fibres clamps serotonin responses to sensory stimuli, but not to aversive experiences. Further, throughout life serotonin fluctuates with sleep-wake oscillations. Interfering with this early buffering of serotonin causes a transient cortical hypoactivity during a critical period. Subsequently, we report disruption of the maturation and survival of VIP+ and Nkx2-1+ interneurons causing developmental cortical hyperexcitability, that is still present in the adult cortex of mice treated postnatally with fluoxetine. Our data suggest that perinatal life is a critical juncture in emergent cognition when neuromodulatory activity acts to sculpt and constrain emergent inhibitory circuits. Transient alterations in such signalling lead to an imbalance in early sensory representation that manifests in a life-long manner.