The medial septum and diagonal band complex (MS-DB) is believed to play a key role in generating theta oscillations in the hippocampus, a phenomenon critical for learning and memory. Although the importance of the MS-DB in hippocampal theta rhythm generation is generally accepted, it remains to be determined whether the MS-DB alone can generate hippocampal oscillations or is only a transducer of rhythmic activity from other brain areas. Secondly, it is known that hippocampal theta rhythm can be separated into an atropine-sensitive and insensitive component. However, it remains to be established if the MS-DB can generate both types of rhythm. To answer these questions, we used a new in vitro rat septohippocampal preparation placed in a her-metically separated two side recording chamber. We showed that carbachol activation of the MS-DB generated large theta oscillations in the CA1 and CA3 regions of the hippocampus. These oscillations were blocked by applying either the GABAA receptor antagonist bicuculline or the AMPA/kainate antagonist DNQX to the hippocampus. Interestingly, the application of the muscarinic receptor antagonist atropine produced only a partial decrease in the amplitude, without modification of the frequency, of theta. These results show for the first time, that upon optimal excitation, the MS-DB alone is able to generate hippocampal oscillations in the theta frequency band. Moreover, these MS-DB generated theta oscillations are mediated by muscarinic and nonmuscarinic receptors and have a pharmacological profile similar to theta rhythm observed in awake animals.