O'Keefe and Recce  Hippocampus 3:317-330 described an interaction between the hippocampal theta rhythm and the spatial firing of pyramidal cells in the CA1 region of the rat hippocampus: they found that a cell's spike activity advances to earlier phases of the theta cycle as the rat passes through the cell's place field. The present study makes use of large-scale parallel recordings to clarify and extend this finding in several ways: 1) Most CA1 pyramidal cells show maximal activity at the same phase of the theta cycle. Although individual units exhibit deeper modulation, the depth of modulation of CA1 population activity is about 50%. The peak firing of inhibitory interneurons in CA1 occurs about 60 degrees in advance of the peak firing of pyramidal cells, but different interneurons vary widely in their peak phases. 2) The first spikes, as the rat enters a pyramidal cell's place field, come 90 degrees-120 degrees after the phase of maximal pyramidal cell population activity, near the phase where inhibition is least. 3) The phase advance is typically an accelerating, rather than linear, function of position within the place field. 4) These phenomena occur both on linear tracks and in two-dimensional environments where locomotion is not constrained to specific paths. 5) In two-dimensional environments, place-related firing is more spatially specific during the early part of the theta cycle than during the late part. This is also true, to a lesser extent, on a linear track. Thus, spatial selectivity waxes and wanes over the theta cycle. 6) Granule cells of the fascia dentata are also modulated by theta. The depth of modulation for the granule cell population approaches 100%, and the peak activity of the granule cell population comes about 90 degrees earlier in the theta cycle than the peak firing of CA1 pyramidal cells. 7) Granule cells, like pyramidal cells, show robust phase precession. 8) Cross-correlation analysis shows that portions of the temporal sequence of CA1 pyramidal cell place fields are replicated repeatedly within individual theta cycles, in highly compressed form. The compression ratio can be as much as 10:1. These findings indicate that phase precession is a very robust effect, distributed across the entire hippocampal population, and that it is likely to be inherited from the fascia dentata or an earlier stage in the hippocampal circuit, rather than generated intrinsically within CA1. It is hypothesized that the compression of temporal sequences of place fields within individual theta cycles permits the use of long-term potentiation for learning of sequential structure, thereby giving a temporal dimension to hippocampal memory traces.