An important, but often ignored distinction in the analysis of EEG signals is that between evoked activity and induced activity. Whereas evoked activity reflects the summation of transient post-synaptic potentials triggered by an event, induced activity, which is mainly oscillatory in nature, is thought to reflect changes in parameters controlling dynamic interactions within and between brain structures. We hypothesize that induced activity may yield information about the dynamics of cell assembly formation, activation and subsequent uncoupling, which may play a prominent role in different types of memory operations. We then describe a number of analysis tools that can be used to study the reactivity of induced rhythmic activity, both in terms of amplitude changes and of phase variability. We briefly discuss how alpha, gamma and theta rhythms are thought to be generated, paying special attention to the hypothesis that the theta rhythm reflects dynamic interactions between the hippocampal system and the neocortex. This hypothesis would imply that studying the reactivity of scalp-recorded theta may provide a window on the contribution of the hippocampus to memory functions. We review studies investigating the reactivity of scalp-recorded theta in paradigms engaging episodic memory, spatial memory and working memory. In addition, we review studies that relate theta reactivity to processes at the interface of memory and language. Despite many unknowns, the experimental evidence largely supports the hypothesis that theta activity plays a functional role in cell assembly formation, a process which may constitute the neural basis of memory formation and retrieval. The available data provide only highly indirect support for the hypothesis that scalp-recorded theta yields information about hippocampal functioning. It is concluded that studying induced rhythmic activity holds promise as an additional important way to study brain function.