Generation of gamma rhythms in reciprocally connected areas of cortex produces synchronous neuronal firing. However, little is known about the consequences of gamma rhythms when generated in non-reciprocally connected regions. This non-reciprocity exists in hippocampus, where gamma rhythms are generated in area CA3 in vitro and in vivo and non-reciprocally projected to area CA1 via the Schaffer collateral pathway. Here we demonstrate how this CA3 gamma rhythm generates two different patterns of local CA1 oscillation dependent on the degree of output from area CA1: 1) In conditions where activity projected to area CA1 produces only very low principal cell recruitment the local population rhythm mimics the gamma rhythm projected from CA3. This activity is generated predominantly by recruitment of CA1 basket cells in a manner dependent on phasic, feedforward excitation of this interneuron subclass. Interneurons in stratum oriens, not receiving CA3 feedforward input, fired at theta frequencies. 2) In the presence of serotonin CA1 principal cell recruitment was markedly enhanced, resulting in dual activation of CA1 basket cells through both feedforward and feedback excitation. Feedback excitation to CA1 stratum oriens interneurons was also enhanced. The resulting change in interneuron network dynamics generated a beta frequency CA1 rhythm (as a near-subharmonic of the gamma rhythm projected from CA3). These findings demonstrate that, in non-reciprocally connected networks, frequency of population rhythms in target areas serve to code for degree of principal cell recruitment by afferent input.