We have used whole cell patch clamp recordings from visually identified neurogliaform (NG) neurons in the stratum lacunosum moleculare (slm) of are CA1 in rat 300 μm hippocampal slices to examine the network properties of these neurons. Slices were obtained from rats anaesthetized with 4% isoflurane and decapitated. During recordings neurons were filled with biocytin to allow anatomical identification of recorded cells. In some experiments cytoplasm was harvested and used in multiplex PCR reactions for the biochemical characterization of the recorded neurons. Data values represent means ± SEM. NG neurons received monosynaptic, short latency (5.4 ± 0.32 ms; n=20), low SD of the mean latency i.e. jitter (268 ± 92 μs; n=9), 6,7-dinitroquinoxaline-2,3-dione (DNQX)-sensitive excitatory inputs directly from the perforant path input to CA1. Single cell RT-PCR revealed that these neurons were GABAergic and the majority expressed mRNA for neuropeptide Y (12/15) while only 2 of 11 non-NG interneurons expressed this mRNA. Immunocytochemically, NG neurons expressed the actin binding protein alpha actinin 2 (5/6). Results from 34 paired recordings performed between adjacent NG neurons showed that 85% of pairs were electrically connected, with a coupling coefficient of 9.26 ± 1.08% (n=26). The presence of electrical coupling allowed the transmission of 7Hz sine waves between neurons, while 20 and 40 Hz waveforms were attenuated more. Spike synchronization between the most strongly coupled neurons was also apparent. In addition to electrical coupling, 70.5% of pairs were also chemically connected displaying a highly reliable bicuculline sensitive IPSC with a characteristic slow decay time constant (42 ± 4 ms, n=23). Characteristic among chemically connected NG pairs was a strong depression of the synaptic response seen with 5Hz stimulation (second IPSC 42 ± 5% of the first IPSC, n=15). This depression was significantly inhibited by the selective GABAB antagonist CGP 55845 (5 μM; second IPSC 73 +/- 11% of the first IPSC; p<0.05 ANOVA with Bonferroni′s Multiple Comparison Test). CGP 55845 also significantly increased the amplitude of the IPSC responding to the first pulse in a 5 Hz train stimulus by 30 ± 11% (p<0.01 Paired t-test; n=15), suggesting a tonic inhibition of synaptic transmission in addition to activity dependent inhibition. Ultrastructural localization for the GABABR1 subunits at NG synapses confirmed the presence of these receptors on NG neurons, with both postsynaptic and presynaptic extrasynaptic labelling. In conclusion, NG neurons form a previously unknown network of electrically and chemically connected neurons in the hippocampus that are well placed to modulate input into the CA1 from the perforant pathway.