The effect of intraseptal microinfusions of the GABA-A agonist muscimol on spontaneously occurring or hypothalamically induced hippocampal formation (HPC) theta field activity and the simultaneously occurring discharge properties of CA1 pyramidal and dentate granule layer phasic theta-ON cells, was investigated in urethane-anesthetized rats. The microinfusion of 5.0-12.5 nmol of muscimol into the medical septum/vertical limb of the diagonal band of Broca (MS/vDBB) resulted in a progressive reduction (beginning 5 min postinfusion) in the power (amplitude) and finally the total loss of theta field activity. In contrast, theta field frequency remained unaffected during the entire postinfusion period that theta field activity was present. In the time immediately following the first 1-min intraseptal microinfusion of 5 nmol muscimol, (before changes in theta amplitude occurred) a brief period of increased phasic theta-ON cell excitability was noted. This was manifested as an increase in the number of discharges per rhythmic burst. Associated with the progressive reduction of the amplitude of theta field activity, phasic theta-ON cell discharge rates progressively decreased for a period beginning 5 min postinfusion of 5 nmol muscimol. Despite the progressive decrease in the number of discharges and a noticeable reduction in the degree of rhythmicity, phasic theta-ON cells maintained their preferred timing of discharges in relation to the phase of theta field activity, while the latter was present. Just prior to the complete abolishment of theta field activity, phasic theta-ON cells ceased discharging. During the period when theta field activity was replaced on low amplitude asynchronous activity, phasic theta-ON cells discharged in bursts correlated with every occurrence of sharp wave field activity. The results support the following conclusions: (1) the brief excitatory effect on HPC theta-ON cell discharges may be correlated pharmacologically with an initial brief increase in HPC ACh turnover. The reduction of phasic theta-ON cell discharges and theta field activity may be correlated with the longer lasting reduction of HPC ACh turnover, controlled by MS/vDBB GABA-A inputs to MS/vDBB cholinergic septohippocampal neurons, possibly along with a direct inhibition of the GABAergic septohippocampal projection; (2) the primary contribution of the MS/vDBB nuclei, as a nodal point in the ascending brainstem HPC synchronizing system, is the modulation of the amplitude of HPC formation theta field activity and secondarily to relay frequency-coded inputs from the posterior hypothalamic region (posterior and supramammillary nuclei); (3) HPC theta and sharp wave field activity represent functionally distinct neural inputs to the same population of phasic theta-ON cells located in both the CA1 pyramidal and dentate granule cell layers.