Gamma frequency (30-80 Hz) oscillations are implicated in memory processing. Such rhythmic activity can be generated intrinsically in the CA3 region of the hippocampus from where it can propagate to the CA1 area. To uncover the synaptic mechanisms underlying the intrahippocampal spread of gamma oscillations, we recorded local field potentials, as well as action potentials and synaptic currents in anatomically identified CA1 and CA3 neurons during carbachol-induced gamma oscillations in mouse hippocampal slices. The firing of the vast majority of CA1 neurons and all CA3 neurons was phase-coupled to the oscillations recorded in the stratum pyramidale of the CA1 region. The predominant synaptic input to CA1 interneurons was excitatory, and their discharge followed the firing of CA3 pyramidal cells at a latency indicative of monosynaptic connections. Correlation analysis of the input-output characteristics of the neurons and local pharmacological block of inhibition both agree with a model in which glutamatergic CA3 input controls the firing of CA1 interneurons, with local pyramidal cell activity having a minimal role. The firing of phase-coupled CA1 pyramidal cells was controlled principally by their inhibitory inputs, which dominated over excitation. Our results indicate that the synchronous firing of CA3 pyramidal cells rhythmically recruits CA1 interneurons and that this feedforward inhibition generates the oscillatory activity in CA1. These findings identify distinct synaptic mechanisms underlying the generation of gamma frequency oscillations in neighboring hippocampal subregions.