The correlation between cell firing and hippocampal theta activity was studied with the spike-triggered averaging method in rats anesthetized with urethane. Projection cells in the CA1 region and the dentate gyrus fired with highest probability on the negative phase of the theta waves recorded from the corresponding regions. CA1 interneurons discharged mainly on the positive phase. In the dentate gyrus about half of the interneurons fired on the negative phase, while the remaining half discharged preferentially on the positive phase of the locally derived theta waves. It was suggested that septal theta "pacemaker' cells directly excite hippocampal interneurons which in turn rhythmically inhibit a large number of projection cells.