Our central question is why the hippocampal CA3 region is the only cortical area capable of forming interference-free representations of complex environmental events (episodes), given that apparently all cortical regions have recurrent excitatory circuits with modifiable synapses, the basic substrate for autoassociative memory networks. We review evidence for the radical (but classic) view that a unique transformation of incoming cortical signals by the dentate gyrus and the subsequent faithful transfer of the resulting code by the mossy fibers are absolutely critical for the appropriate association of memory items by CA3 and, in general, for hippocampal function. In particular, at the gate of the hippocampal formation, the dentate gyrus possesses a set of unusual properties, which selectively evolved for the task of code transformation between cortical afferents and the hippocampus. These evolutionarily conserved anatomical features enable the dentate gyrus to translate the noisy signal of the upstream cortical areas into the sparse and specific code of hippocampal formation, which is indispensable for the efficient storage and recall of multiple, multidimensional memory items. To achieve this goal the mossy fiber pathway maximally utilizes the opportunity to differentially regulate its postsynaptic partners. Selective innervation of CA3 pyramidal cells and interneurons by distinct terminal types creates a favorable condition to differentially regulate the short-term and long-term plasticity and the motility of various mossy terminal types. The utility of this highly dynamic system appears to be the frequency-dependent fine-tuning the excitation and inhibition evoked by the large and the small mossy terminals respectively. This will determine exactly which CA3 cell population is active and induces permanent modification in the autoassociational network of the CA3 region.
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