Theta rhythm is the best synchronized EEG activity that can be recorded in the mammalian brain.Hippocampal formation (HPC) is considered to be the main structure involved in the generationof this activity. Numerous data indicate that theta rhythm is involved in long-term potentiation,spatial learning, spatial navigation, verbal and spatial working memory, REM sleep, locomotor activities,and sensori-motor integration. Since the discovery of cholinergically-induced theta rhythmrecorded from the hippocampal formation slices, central mechanisms underlying theta generationhave been successfully studied in the in vitro conditions. Most of in vitro studies have been focusedon the basic question regarding the similarities between cholinergically-induced theta oscillationsand theta rhythm examined in the in vivo conditions. The results of these experiments have clearlydemonstrated that the main properties of theta rhythm in both, in vitro and in vivo preparations aresimilar. The present review has one main objective: to characterize the basic mechanisms underlyingthe generation of theta rhythm in the hippocampal formation maintained in vitro.