The physiological characteristics of neurons that project to the hippocampus and dentate gyrus via the medial perforant pathway (projection neurons) are well known, but the characteristics of neurons that project to these areas via the lateral perforant pathway (projection neurons) are less well known. We have used retrograde tracing and whole-cell recording in brain slices to compare the membrane and firing properties of medial perforant pathway and lateral perforant pathway projection neurons in layer II of the medial and lateral entorhinal cortex. The properties of medial perforant pathway projection neurons were identical to those reported previously for spiny stellate neurons in the medial entorhinal cortex. In contrast, lateral perforant pathway projection neurons were characterized by a higher input resistance, a lack of time-dependent inward (anomalous) rectification, and a lack of prominent depolarizing spike afterpotentials. Voltage-clamp recordings suggest that the absence of anomalous rectification in lateral perforant pathway projection neurons is due to smaller hyperpolarization activated cation currents in these cells, and the lack of depolarizing afterpotential may be due to smaller low-threshold calcium currents. Persistent sodium current was also smaller in lateral perforant pathway projection neurons, but the difference in persistent sodium current between medial perforant pathway and lateral perforant projection neurons was much less pronounced than the difference in low voltage activated currents. These results underscore the functional differences between the medial entorhinal cortex and lateral entorhinal cortex, and may help to explain the differing abilities of these cortical areas to participate in certain types of network activity.