Auditory stimuli repeated at short intervals result in diminished evoked responses recorded from the skull surface and from the hippocampus in the rat. The rat has been used to model diminished responses to repeated auditory stimuli--a phenomenon seen in normal human subjects, but often absent in schizophrenics. In this study, we examined the neural circuitry involved in the processing and gating of auditory responses recorded from the hippocampus of the rat. Evoked potentials and single neuron activity with diminished responses to the second of paired tones were recorded in the brainstem reticular formation in the paragigantocellular region at the caudal level of the pons, but diminished responses were not observed in the primary auditory relay nuclei. Electrical stimulation of this region of the brainstem reticular formation was able to substitute for the first, or conditioning, auditory tone to produce sensory gating of the response to the second, or test, tone when recording from the hippocampus. Stimulation of the auditory nuclei up to the level of the lateral lemniscus, but not the superior colliculus, was also able to substitute for an auditory stimulus to produce sensory gating in the hippocampus. The gating of hippocampal responses to auditory stimuli may thus involve pathways which branch from the lemniscal auditory pathway at the level of the lateral lemniscus and ascend to the hippocampus via the brainstem reticular formation.