Alzheimer’s disease (AD) is a progressive neurodegenerative disorder of cognitive function whose cellular pathology and molecular etiology have been increasingly and dramatically unraveled over the last several years. Despite this substantial knowledge base, the disease remains poorly understood due to a basic lack of understanding of how memories are stored and recalled in the brain. We describe a preliminary attempt at constructing a detailed model of these basic neural mechanisms; in particular, the natural dynamics of neuronal activity in hippocampal region CA3 and the modulation and control of these dynamics by subcortical cholinergic and GABAergic input to the hippocampus. We view the construction of such a model, with sufficient detail at the cellular and subcellular level, to be a necessary first step in understanding the effect of AD pathology on the functional behavior of the underlying neural circuitry. The network is based on the 66-compartment hippocampal pyramidal cell model of Traub and colleagues and their 51-compartment interneuron interconnected with realistic AMPA-, NMDA-, and GABA_A-mediated synapses. Traub and others have shown that a network composed of these modeled cells is capable of synchronization in the gamma frequency range. We demonstrate here that this synchronization mechanism can implement an attractor-based autoassociative memory. A new input pattern arrives at the beginning of each theta cycle (comprised of 5–10 gamma cycles), and the pattern of activity across the network converges, over several gamma cycles, to a stable attractor that represents the stored memory. In this model, cholinergic deprivation, one of the hallmarks of AD, leads to a slowing of the gamma frequency which reduces the number of “cycles” available to reach an attractor state. We suggest that this may be one mechanism underlying the memory loss and cognitive slowing seen in AD. Our results also support the idea that acetylcholine acts on individual neurons to induce and maintain a transition from intrinsic bursting to spiking in pyramidal cells. These results are consistent with the hypothesis that spiking and bursting in CA3 pyramidal cells mediate separate behavioral functions, and that cholinergic input is required for the transition to and support of behavioral states associated with the online processing and recall of information.