The hippocampus, a brain structure essential for memory and cognition, is classically represented as a trisynaptic excitatory circuit. Recent findings challenge this view, particularly with regard to the mossy fibre input to CA3, the second synapse in the trisynaptic pathway. Thus, the powerful mossy fibre input to CA3 pyramidal cells might mediate both synaptic excitation and inhibition. Here we show, by recording from connected cell pairs in rat entorhinal-hippocampal slice cultures, that single action potentials in a dentate granule cell evoke a net inhibitory signal in a pyramidal cell. The hyperpolarization is due to disynaptic feedforward inhibition, which overwhelms monosynaptic excitation. Interestingly, this net inhibitory synaptic response changes to an excitatory signal when the frequency of presynaptic action potentials increases. The process responsible for this switch involves the facilitation of monosynaptic excitatory transmission coupled with rapid depression of inhibitory circuits. This ability to immediately switch the polarity of synaptic responses constitutes a novel synaptic mechanism, which might be crucial to the state-dependent processing of information in associative hippocampal networks.