AbstractAcute intoxicating doses of ethanol‐producing blood alcohol levels of 120–200 mg% increase paired‐pulse (PP) inhibition in the dentate gyrus of anesthetized rats suggesting that ethanol increases recurrent inhibitory processes (Wiesner, J. B., and S. J. Henriksen (1987) Ethanol enhances recurrent inhibition in the dentate gyrus of the hippocampus. Neurosci. Lett. 79:169–173). To further understanding of the neuronal mechanisms underlying this phenomenon, the authors studied the effects of the benzodiazepine (BZ), chlordiazepoxide, and acute intoxicating levels of ethanol on extracellular field potential recordings and single‐unit activity in the dentate gyrus and area CA1 of the hippocampus. In the dentate, ethanol had no effect on population excitatory postsynaptic potential (pEPSP) amplitudes or slopes; decreased population spike (PS) amplitudes (25%); increased PP inhibition; decreased dentate granule cell (DGC) spontaneous activity (58%); had no effect on putative interneuron spontaneous activity; and markedly increased post field potential‐evoked interneuron discharges (IDs, 218%). Chlordiazepoxide had no effect on pEPSP amplitudes or slopes or PS amplitudes; increased PP inhibition; decreased DGC (62%) and interneuron (72%) spontaneous activity; and markedly decreased IDs (89%). In CA1, ethanol had no effect on pEPSP amplitudes or slopes; decreased PS amplitudes (26%); had no effect on PP responses; decreased pyramidal cell (PC) spontaneous activity (39%); had no effect on interneuron spontaneous activity; and markedly increased IDs (97%). Chlordiazepoxide had no effect on pEPSP amplitudes or slopes or PS amplitudes; had no effect on PP responses; decreased PC spontaneous activity (41%); and had no effect on interneuron spontaneous activity or IDs. The results suggest that the BZs decrease principal cell excitability by postsynaptic facilitation of inhibitory processes, whereas ethanol decreases principal cell excitability by postsynaptic facilitation of inhibitory processes, whereas ethanol decreases principal cell excitability indirectly by increasing the excitability of inhibitory interneurons.