Hippocampal learning and memory tasks are tightly coupled to the hippocampal theta rhythm, which is critically dependent on the medial septum/diagonal band of Broca (MSDB) although the underlying mechanisms remain unclear. The MSDB sends both cholinergic and GABAergic projections to the hippocampus. Here we show that: (i) septo-hippocampal GABAergic but not cholinergic neurons have a pacemaking current, the H-current, and that its selective blockade by ZD7288 reduces their spontaneous firing in rat brain slices; and (ii), local infusions of ZD7288 into the MSDB reduce exploration and sensory evoked hippocampal theta bursts in behaving rats. Thus, the H-current in septohippocampal GABAergic neurons modulates the hippocampal theta rhythm.