Top-down prefrontal cortex inputs to the hippocampus have been hypothesized to be important in memory consolidation, retrieval, and the pathophysiology of major psychiatric diseases; however, no such direct projections have been identified and functionally described. Here we report the discovery of a monosynaptic prefrontal cortex (predominantly anterior cingulate) to hippocampus (CA3 to CA1 region) projection in mice, and find that optogenetic manipulation of this projection (here termed AC-CA) is capable of eliciting contextual memory retrieval. To explore the network mechanisms of this process, we developed and applied tools to observe cellular-resolution neural activity in the hippocampus while stimulating AC-CA projections during memory retrieval in mice behaving in virtual-reality environments. Using this approach, we found that learning drives the emergence of a sparse class of neurons in CA2/CA3 that are highly correlated with the local network and that lead synchronous population activity events; these neurons are then preferentially recruited by the AC-CA projection during memory retrieval. These findings reveal a sparsely implemented memory retrieval mechanism in the hippocampus that operates via direct top-down prefrontal input, with implications for the patterning and storage of salient memory representations.