Gamma frequency oscillations (30-100 Hz) have been suggested to underlie various cognitive and motor functions. Here, we examine the generation of gamma oscillation currents in the hippocampus, using two-dimensional, 96-site silicon probes. Two gamma generators were identified, one in the dentate gyrus and another in the CA3-CA1 regions. The coupling strength between the two oscillators varied during both theta and nontheta states. Both pyramidal cells and interneurons were phase-locked to gamma waves. Anatomical connectivity, rather than physical distance, determined the coupling strength of the oscillating neurons. CA3 pyramidal neurons discharged CA3 and CA1 interneurons at latencies indicative of monosynaptic connections. Intrahippocampal gamma oscillation emerges in the CA3 recurrent system, which entrains the CA1 region via its interneurons.