The nucleus reuniens thalami (RE) originates dense projections to CA1, forming asymmetrical synapses on spines (50%) and dendrites (50%). The hypothesis that RE input modulates transmission in CA1 through excitation of both pyramidal cells and interneurons was tested using electrophysiological methods in the anesthetized rat. The RE-CA1 afferents were selectively stimulated at their origin; evoked field potentials and unit activity were recorded in CA1. RE-evoked depth profiles showed a prominent negative deflection in the stratum lacunosum-moleculare and a positive one in the stratum radiatum. The lacunosum-moleculare sink-radiatum source configuration is compatible with RE-elicited depolarization of apical dendrites of pyramidal cells. Despite a consistent and robust paired pulse facilitation of RE-evoked field potentials, population spikes in the stratum pyramidale were not detected at any tested condition. This indicates the inability of RE-CA1 input to discharge pyramidal cells. However, stimulation of RE-elicited spiking of extracellularly recorded units in strata oriens/alveus and distal radiatum, indicative of the activation of local interneurons. Thus, RE seems to modulate transmission in CA1 through a (subthreshold) depolarization of pyramidal cells and a suprathreshold excitation of putative inhibitory oriens/alveus and radiatum interneurons. RE-evoked monosynaptic or disynaptic field potentials were associated with stimulation of rostral or caudal RE, respectively. Anatomically, a projection from caudal to rostral RE was demonstrated that can account for the disynaptic RE-CA1 input. Because caudal RE receives input from the hippocampus via the subiculum, we propose the existence of a closed RE-hippocampal circuit that allows RE to modulate the activity in CA1, depending on hippocampal output.