The striatum is essential for learning which actions lead to reward and for implementing those actions. Decades of experimental and theoretical work have led to several influential theories and hypotheses about how the striatal circuit mediates these functions. However, owing to technical limitations, testing these hypotheses rigorously has been difficult. In this Review, we briefly describe some of the classic ideas of striatal function. We then review recent studies in rodents that take advantage of optical and genetic methods to test these classic ideas by recording and manipulating identified cell types within the circuit. This new body of work has provided experimental support of some longstanding ideas about the striatal circuit and has uncovered critical aspects of the classic view that are incorrect or incomplete.