Here we found that perforant path stimulation in rat hippocampal slices evoked long-lasting barrages of synaptic inputs in subpopulations of dentate gyrus mossy cells and hilar interneurons. Synaptic barrages triggered persistent firing in hilar neurons (hilar up-states). We found that synaptic barrages originate from semilunar granule cells (SGCs), glutamatergic neurons in the inner molecular layer that generate long-duration plateau potentials in response to excitatory synaptic input. MK801, nimodipine and nickel all abolished both stimulus-evoked plateau potentials in SGCs and synaptic barrages in downstream hilar neurons without blocking fast synaptic transmission. Hilar up-states triggered functional inhibition in granule cells that persisted for more than 10 s. Hilar cell assemblies, identified by simultaneous triple and paired intracellular recordings, were linked by persistent firing in SGCs. Population responses recorded in hilar neurons accurately encoded stimulus identity. Stimulus-evoked up-states in the dentate gyrus represent a potential cellular basis for hippocampal working memory.