Computational models suggest that the hippocampus can perform both pattern completion and pattern separation, depending on the degree of similarity between sensory inputs. To test this idea, we recorded simultaneously from CA3 and CA1 while rats ran in a square environment that was gradually morphed into a circle, or vice versa, with all tests occurring in the same location in the same room. In phase 1, the rats were trained in randomly presented circle and square enclosures for 8 sessions x 10 min. The overlap of activity in the two shapes was significantly less in CA3 than in CA1 after correction for differences in sparsity, suggesting more efficient pattern separation in CA3 (Leutgeb et al., SfN 2003). In phase 2, one shape was gradually morphed into the other, using 5 intermediate shapes. CA3 cells remained close to their initial firing rates during the early parts of the morph sequence, suggesting that pattern completion occurs as the shape of the box starts to change. In the later parts of the morphi...