The existence of recurrent synaptic connections in CA3 led to the hypothesis that CA3 is an autoassociative network similar to the Hopfield networks studied by theorists. CA3 undergoes gamma frequency periodic inhibition that prevents a persistent attractor state. This argues against the analogy to Hopfield nets, in which an attractor state can be used for working memory. However, we show that such periodic inhibition allows one cycle of recurrent excitatory activity and that this is sufficient for memory retrieval (within milliseconds). Thus, gamma oscillations are compatible with a long-term autoassociative memory function for CA3. A second goal of our work was to evaluate previous methods for estimating the memory capacity (P) of CA3. We confirm the equation, P = c/a[superscript 2], where c is the probability that any two cells are recurrently connected and a is the fraction of cells representing a memory item. In applying this to CA3, we focus on CA3a, the subregion where recurrent connections are most numerous (c = 0.2) and approximate randomness. We estimate that a memory item is represented by [similar to]225 of the 70,000 neurons in CA3a (a = 0.003) and that [similar to]20,000 memory items can be stored. Our general conclusion is that the physiological and anatomical findings of CA3a are consistent with an autoassociative function. The nature of the information that is associated in CA3a is discussed. We also discuss how the autoassociative properties of CA3 and the heteroassociative properties of dentate synapses (linking sequential memories) form an integrated system for the storage and recall of item sequences. The recall process generates the phase precession in dentate, CA3, and entorhinal cortex.