Medial entorhinal cortex (EC) deep layer neurons projecting to the dentate gyrus (DG) were studied. Neurons, retrogradely-labelled with rhodamine-dextran-amine were characterized electrophysiologically with the patch clamp technique and finally labelled with biocytin. Pyramidal and nonpyramidal neurons form projections from the deep layers of the EC to the molecular layer of the DG. In addition, both classes of projection neurons send ascending axon collaterals to the superficial layers of the EC. Both classes of neurons were characterized physiologically by regular action potential firing upon depolarizing current injection. While a substantial number of pyramidal projection cells showed intrinsic membrane potential oscillations, none of the studied nonpyramidal cells exhibited oscillations. Despite the morphological similarity of bipolar and multipolar cells to those of GABAergic interneurons in the EC, their electrophysiological characteristics were similar to those of principal neurons and immunocytochemistry for GABA was negative. We conclude, that neurons of the deep layers of the medial EC projecting to the DG may function as both local circuit and projecting neurons thereby contributing to synchronization between deep layers of the EC, superficial layers of the EC and the DG.