Ample research demonstrates that pathophysiological levels of the pro-inflammatory cytokine interleukin-1 (IL-1) produces detrimental effects on memory functioning. However, recent evidence suggests that IL-1 may be required for the normal physiological regulation of hippocampal-dependent memory. To substantiate the physiological role of IL-1 in learning and memory we examined the induction of IL-1 gene expression following a learning experience, and the effects of IL-1 signaling blockade, by either genetic or pharmacological manipulations, on memory functioning. We show that IL-1 gene expression is induced in the hippocampus 24h following fear-conditioning in wild type mice, but not in two mouse strains with impaired IL-1 signaling. Moreover, we report that mice with transgenic over-expression of IL-1 receptor antagonist restricted to the CNS (IL-1raTG) display impaired hippocampal-dependent and intact hippocampal-independent memory in the water maze and fear-conditioning paradigms. We further demonstrate that continuous administration of IL-1ra via osmotic minipumps during prenatal development disrupt memory performance in adult mice, suggesting that IL-1 plays a critical role not only in the formation of hippocampal-dependent memory but also in normal hippocampal development. Finally, we tested the dual role of IL-1 in memory by intracerebroventricular (ICV) administration of different doses of IL-1beta and IL-1ra following learning, providing the first systematic evidence that the involvement of IL-1 in hippocampal-dependent memory follows an inverted U-shaped pattern, i.e., a slight increase in brain IL-1 levels can improve memory, whereas any deviation from the physiological range, either by excess elevation in IL-1 levels or by blockade of IL-1 signaling, results in impaired memory.