Among the molecular, cellular, and systemic events that have been proposed to modulate the function of the hippocampus and the entorhinal cortex (EC), one of the most frequently cited possibilities is the activation of the serotonergic system. Neurons in the hippocampus and in the EC receive a strong serotonergic projection from the raphe nuclei and express serotonin (5-HT) receptors at high density. Here we review the various effects of 5-HT on intrinsic and synaptic properties of neurons in the hippocampus and the EC. Although similar membrane-potential changes following 5-HT application have been reported for neurons of the entorhinal cortex and the hippocampus, the effects of serotonin on synaptic transmission are contrary in both areas. Serotonin mainly depresses fast and slow inhibition of the principal output cells of the hippocampus, whereas it selectively suppresses the excitation in the entorhinal cortex. On the basis of these data, we discuss the possible role of serotonin under physiological and pathophysiological circumstances.