We used fluorescent in-situ hybridization and confocal microscopy to monitor the subcellular distribution of the immediate-early gene Arc. Arc RNA appeared in discrete intranuclear foci within minutes of neuronal activation and subsequently disappeared from the nucleus and accumulated in the cytoplasm by 30 minutes. The time course of nuclear versus cytoplasmic Arc RNA accumulation was distinct, and could therefore be used to infer the activity history of individual neurons at two times. Following sequential exposure of rats to two different environments or to the same environment twice, the proportion of CA1 neurons with cytoplasmic, nuclear or overlapping Arc expression profiles matched predictions derived from ensemble neurophysiological recordings of hippocampal neuronal ensembles. Arc gene induction is thus specifically linked to neural encoding processes.