Neural networks of the brain display multiple patterns of oscillatory activity. Some of these rhythms are generated intrinsically within the local network, and can therefore be studied in isolated preparations. Here we discuss local-circuit mechanisms involved in hippocampal CA3 gamma oscillations, one of the best understood locally generated network patterns in the mammalian brain. Perisomatic inhibitory cells are crucial players in gamma oscillogenesis. They provide prominent rhythmic inhibition to CA3 pyramidal cells and are themselves synchronized primarily by excitatory synaptic inputs derived from the local collaterals of CA3 pyramidal cells. The recruitment of this recurrent excitatory-inhibitory feedback loop during hippocampal gamma oscillations suggests that local gamma oscillations not only control when, but also how many and which pyramidal cells will fire during each gamma cycle.