The involvement of posterior cingulate cortex (PCC) on ketamine-induced psychosis relevant behaviors was investigated in rats. Bilateral infusion of muscimol, a GABAA receptor agonist, into the PCC significantly antagonized ketamine-induced deficit in prepulse inhibition of a startle reflex (PPI), deficit in gating of hippocampal auditory evoked potentials, and behavioral hyperlocomotion in a dose dependent manner. Local infusion of ketamine directly into the PCC also induced a PPI deficit. Systemic injection of ketamine (3 mg/kg, s.c.) induced an increase in power of electrographic activity in the gamma band (30–100 Hz) in both the PCC and the hippocampus; peak theta (4–10 Hz) power was not significantly altered, but peak theta frequency was increased by ketamine. In order to exclude volume conduction from the hippocampus to PCC, inactivation of the hippocampus was made by local infusion of muscimol into the hippocampus prior to ketamine administration. Muscimol in the hippocampus effectively blocked ketamine-induced increase of gamma power in the hippocampus but not in the PCC, suggesting independent generation of gamma waves in PCC and hippocampus. It is suggested that the PCC is part of the brain network mediating ketamine-induced psychosis related behaviors.