Gating of sensory responses is impaired in schizophrenic patients and animal models of schizophrenia. Ketamine, an N-methyl-d-aspartate receptor antagonist, is known to induce schizophrenic-like symptoms including sensory gating deficits in humans. This study aims to investigate the mechanisms underlying ketamine's effect on gating of auditory evoked potentials in the hippocampus of freely moving rats. Gating was measured by the ratio of the test-click response (T) to the conditioning-click response (C), or T/C, with T and C measured as peak amplitudes. Ketamine (1, 3, or 6 mg/kg s.c.) injection dose-dependently increased T/C ratio as compared to saline injection (s.c.). T/C ratio was 0.48 +/- 0.05 after saline injection and 0.73 +/- 0.17 after ketamine (3 mg/kg s.c.) injection. The increase in T/C ratio after ketamine was blocked by prior inactivation of the medial septum with GABA(A) receptor agonist muscimol or by systemic administration of antipsychotic drugs, including chlorpromazine (5 mg/kg i.p.), haloperidol (1 mg/kg i.p.), or clozapine (7.5 mg/kg i.p.). Infusion of muscimol into the medial septum or injection of an antipsychotic drug alone did not affect the T/C ratio. However, rats with selective lesion of the septohippocampal cholinergic neurons by 192 IgG-saporin showed a significantly higher T/C ratio (0.86 +/- 0.10) than sham lesion rats (0.26 +/- 0.07), and ketamine did not further increase T/C ratio in rats with septohippocampal cholinergic neuron lesion. Ketamine's disruption of hippocampal auditory gating was normalized by inactivation of the medial septum; in addition, septal cholinergic neurons participate in normal auditory gating.