GABAergic interneurones are necessary for the emergence of hippocampal gamma-frequency network oscillations, during which they play a key role in the synchronization of pyramidal cell firing. However, it remains to be resolved how distinct interneurone subtypes contribute to gamma-frequency oscillations, in what way the spatiotemporal pattern of interneuronal input affects principal cell activity; and by which mechanisms the interneurones themselves are synchronized. Here we summarize recent evidence from cholinergically induced gamma-frequency network oscillations in vitro, showing that perisomatic-targeting GABAergic interneurones provide prominent rhythmic inhibition in pyramidal cells, and that these interneurones are synchronized by recurrent excitation. We conclude by presenting a minimal integrate-and-fire network model which demonstrates that this excitatory-inhibitory feedback loop is sufficient to explain the generation of intrahippocampal gamma-frequency oscillations. © The Physiological Society 2004.