A major challenge to understanding cortical function is the complexity found at both the single-cell and microcircuit levels. Here we outline what is known about the microcircuitry of the CA1 region of the mammalian hippocampus. We then explore the possible functional roles of the variety of neuronal types within this microcircuit during dynamic information processing. This is considered within the framework of CA1 acting as an associative storage device during encoding and retrieval of episodic memories.