Excitatory synaptic activity in horizontal stratum oriens-alveus interneurons (OAIs) is driven by the recurrent collaterals of CA1 pyramidal cells and is strongly influenced by protocols that elicit synaptic plasticity in these principal neurons. Induction of LTD in the Schaffer collateral-CA1 pyramidal neuron synapse causes a passive down-regulation of stratum radiatum-evoked excitatory synaptic responses onto OAIs. In addition, we show that the strength of the temporoammonic input to the CA1 pyramidal neuron distal dendrites is regulated by OAI activity. The passive propagation of LTD to OAIs consequently disinhibits the direct entorhinal cortex-CA1 input, resulting in an enhanced excitation of CA1 pyramidal neurons by a mechanism not requiring activation of the trisynaptic pathway.