Patients with Alzheimer's disease (AD) display altered functioning of cortical networks, including altered patterns of synchronous activity and a serious deficit in cholinergic septohippocampal (SH) innervation. However, the mechanisms underlying these alterations and the implication of the GABAergic SH component in AD are largely unknown. In addition, the GABAergic septohippocampal pathway (SHP) is believed to regulate synchronous hippocampal activity by controlling the activity of interneurons. Here we show, using well-characterized pathway tracing experiments, that innervation of the GABAergic SHP decreases during normal aging. Furthermore, in an AD mouse model (hAPP(Sw,Ind); J20 mice), the GABAergic SHP shows a dramatic and early onset of this decrease in 8-mo-old mice. This decline is not caused by neuronal loss, but by the reduced number and complexity of GABAergic SH axon terminals. Finally, we demonstrate that hippocampal theta and gamma rhythm power spectra are markedly diminished in 8-mo-old behaving mice expressing mutated hAPP. In addition to the well-known loss of cholinergic input to the hippocampus in AD, these data suggest that the altered patterns of synchronous activity seen in patients with AD could be caused by the loss of GABAergic SH axons, which modulate hippocampal network activities.