We learn from experience. Our brain constantly integrates sensory signals from our current environment and compares them to information derived from past experiences, stored as memories. This comparison of past and present information helps us learn from our experiences and adapt our behavior to ever-changing harmful or rewarding environmental conditions. The functional interaction between the hippocampus (HC) and its neighboring entorhinal cortex (EC) underlies this interplay between sensory processing and memory recall. The hippocampus is the center of learning and memory in the brain, while the entorhinal cortex is a hub of multi-sensory processing. The long-accepted view of the cortico-hippocampal circuit states that the hippocampus receives processed sensory information from the superficial layers of the entorhinal cortex, but does not send direct feedback to these layers; instead, the hippocampus sends processed memory information to the deep layers of the EC, which then relay the information back to the superficial EC layers, thus creating an indirect loop. Novel findings from our lab suggest that HC provides direct feedback to EC, resulting in a true reciprocal circuit architecture by which hippocampally-processed memory information can actively modulate sensory processing in the EC. My project challenges the canonical view and aims to elucidate the neuronal mechanism by which memory of past experiences influences the perception of our current surroundings as positive or negative, thus enabling us to adapt our behavior in response to changing environmental demands. Importantly, sensory hallucinations in Schizophrenia and failure to distinguish between past and present sensory contexts in Post-Traumatic Stress Disorder allude to an inappropriate integration of memory and sensory inputs, perhaps stemming from abnormalities in the proposed cortico-hippocampal circuit. A more thorough understanding of how hippocampal memory feedback modulates cortical processing could help identify putative targets—circuit elements and neuronal processes—for therapeutic intervention in such neuropsychiatric disorders.