We propose that the activity patterns of CA3 hippocampal pyramidal cells in freely running rats can be described as a temporal phenomenon, where the timing of bursts is modulated by the animal's running speed. With this hypothesis, we explain why pyramidal cells fire in specific spatial locations, and how place cells phase-precess with respect to the EEG theta rhythm for rats running on linear tracks. We are also able to explain why wheel cells phase-lock with respect to the theta rhythm for rats running in a wheel. Using biophysically minimal models of neurons, we show how the same network of neurons displays these activity patterns. The different rhythms are the result of inhibition being used in different ways by the system. The inhibition is produced by anatomically and physiologically diverse types of interneurons, whose role in controlling the firing patterns of hippocampal cells we analyze. Each firing pattern is characterized by a different set of functional relationships between network elements. Our analysis suggests a way to understand these functional relationships and transitions between them. Hippocampus 2001;11:204–215. © 2001 Wiley-Liss, Inc.