Network properties of the hippocampus emerge from the interaction of principal cells and a heterogeneous population of interneurons expressing gamma-aminobutyric acid (GABA). To understand these interactions, the synaptic connections of different types of interneurons need to be elucidated. Here we describe a type of inhibitory interneuron of the hippocampal CA3 region that has an axon coaligned with the mossy fibers. Whole-cell patch-clamp recordings, in combination with intracellular biocytin filling, were made from nonpyramidal cells of the stratum lucidum under visual control. Mossy fiber-associated (MFA) interneurons generated brief action potentials followed by a prominent after-hyperpolarization. Subsequent visualization revealed an extensive axonal arbor which was preferentially located in the stratum lucidum of CA3 and often invaded the hilus. The dendrites of MFA interneurons were mainly located in the strata radiatum and oriens, suggesting that these cells are primarily activated by associational and commissural fibers. Electron microscopic analysis showed that axon terminals of MFA interneurons established symmetric synaptic contacts predominantly on proximal apical dendritic shafts, and to a lesser degree, on somata of pyramidal cells. Synaptic contacts were also found on GABAergic interneurons of the CA3 region and putative mossy cells of the hilus. Inhibitory postsynaptic currents (IPSCs) elicited by MFA interneurons in simultaneously recorded pyramidal cells had fast kinetics (half duration, 3.6 ms) and were blocked by the GABA(A) receptor antagonist bicuculline. Thus, MFA interneurons are GABAergic cells in a position to selectively suppress the mossy fiber input, an important requirement for the recall of memory traces from the CA3 network.