The influence of water deprivation on hippocampal long-term potentiation (LTP), theta rhythm, and contextual fear conditioning in rats was examined. In Experiment 1, hippocampal EEG activity and perforant path LTP were assessed in pentobarbital-anesthetized rats. Water deprivation did not affect baseline cell excitability or low-frequency synaptic transmission in the dentate gyrus, but it increased the magnitude of perforant path LTP and elevated the proportion of theta rhythm in the EEG. In Experiment 2, rats were classically conditioned to fear a novel context through the use of aversive footshocks. Water deprivation facilitated the rate of contextual fear conditioning but did not alter the asymptote of learning. Experiment 3 demonstrated that the facilitation of contextual fear conditioning was not due to a change in unconditional shock sensitivity. These results suggest that water deprivation exerts an influence on contextual fear conditioning by modulating hippocampal LTP and theta rhythm and that these processes serve to encode contextual information during learning.