Significance The hippocampal area Cornu Ammonis (CA) CA2 is a small region interposed between CA1 and CA3. For a long time, there has been a lack of information on the CA2 area’s role in memory formation. This area is innervated by supramammillary axonal fibers that are rich with Substance P (SP), which acts as a neurotransmitter and neuromodulator. We show that SP induces an NMDA receptor- and protein synthesis-dependent potentiation of CA2 synapses that requires kinases such as CaMKIV and PKMζ. The SP-induced effects on Schaffer collateral-CA2 synapses transform entorhinal cortical-CA2 short-term potentiation into long-term potentiation, thereby expressing synaptic tagging and capture, an associative property of neuronal populations that engage in consolidation.