Dysfunction of the prefrontal cortex (PFC) is considered to be an important factor contributing to a decrease in cognitive performance of schizophrenia patients. The medial PFC (mPFC) is innervated by the hippocampus/subiculum, and the subiculum-mPFC pathway is known to be involved in various cognitive processes. Glutamate-containing subicular axons innervate cortical pyramidal neurons and interneurons where AMPA and NMDA receptors are implicated in synaptic transmission. In our experiments, properties of subiculum-mPFC interactions were studied using pathway stimulation and local field potential (LFP) recordings of the mPFC in urethane-anaesthetized rats. Changes in paired-pulse facilitation (PPF) and LFP oscillations, effects of the NMDA receptor antagonist MK-801, and the AMPAkine LY451395 were evaluated. Effects of disruption of the thalamo-cortical loop with local microinjection of lidocaine into the mediodorsal thalamic nucleus (MD) were also studied. Our findings demonstrate that both systemic administration of MK-801 and local MD lidocaine microinjection produce similar changes in LFP oscillations and reduction in PPF. Specifically, it was observed that MK-801 (0.05 mg/kg i.v.) and intra-thalamic lidocaine changed regular, 2 Hz delta oscillation to a less regular 0.5-1.5 Hz delta rhythm. Concurrently, PPF in response to electrical stimulation of the subiculum was significantly attenuated. Administration of the AMPAkine LY451395 (0.01 mg/kg i.v.) reversed the MK-801- and lidocaine-induced changes, and was itself blocked by the AMPA receptor antagonist CP-465022. Analysis of our findings suggests a critical role of cortical interneurons in NMDA/AMPA receptor-mediated changes in thalamo-cortical oscillations and PPF, and contributes to our understanding of the NMDA hypofunction model of schizophrenia.