The neocortex depends upon a relative balance of recurrent excitation and inhibition for its operation. During spontaneous Up states, cortical pyramidal cells receive proportional barrages of excitatory and inhibitory synaptic potentials. Many of these synaptic potentials arise from the activity of nearby neurons, although the identity of these cells is relatively unknown, especially for those underlying the generation of inhibitory synaptic events. To address these fundamental questions, we developed an in vitro submerged slice preparation of the mouse entorhinal cortex that generates robust and regular spontaneous recurrent network activity in the form of the slow oscillation. By performing whole-cell recordings from multiple cell types identified with green fluorescent protein expression and electrophysiological and/or morphological properties, we show that distinct functional subpopulations of neurons exist in the entorhinal cortex, with large variations in contribution to the generation of balanced excitation and inhibition during the slow oscillation. The most active neurons during the slow oscillation are excitatory pyramidal and inhibitory fast spiking interneurons, receiving robust barrages of both excitatory and inhibitory synaptic potentials. Weak action potential activity was observed in stellate excitatory neurons and somatostatin-containing interneurons. In contrast, interneurons containing neuropeptide Y, vasoactive intestinal peptide, or the 5-hydroxytryptamine (serotonin) 3a receptor, were silent. Our data demonstrate remarkable functional specificity in the interactions between different excitatory and inhibitory cortical neuronal subtypes, and suggest that it is the large recurrent interaction between pyramidal neurons and fast spiking interneurons that is responsible for the generation of persistent activity that characterizes the depolarized states of the cortex.