The theta rhythm appears in the rat hippocampal electroencephalogram during exploration and shows phase locking to stimulus acquisition. Lesions that block theta rhythm impair performance in tasks requiring reversal of prior learning, including reversal in a T-maze, where associations between one arm location and food reward need to be extinguished in favor of associations between the opposite arm location and food reward. Here, a hippocampal model shows how theta rhythm could be important for reversal in this task by providing separate functional phases during each 100-300 msec cycle, consistent with physiological data. In the model, effective encoding of new associations occurs in the phase when synaptic input from entorhinal cortex is strong and long-term potentiation (LTP) of excitatory connections arising from hippocampal region CA3 is strong, but synaptic currents arising from region CA3 input are weak (to prevent interference from prior learned associations). Retrieval of old associations occurs in the phase when entorhinal input is weak and synaptic input from region CA3 is strong, but when depotentiation occurs at synapses from CA3 (to allow extinction of prior learned associations that do not match current input). These phasic changes require that LTP at synapses arising from region CA3 should be strongest at the phase when synaptic transmission at these synapses is weakest. Consistent with these requirements, our recent data show that synaptic transmission in stratum radiatum is weakest at the positive peak of local theta, which is when previous data show that induction of LTP is strongest in this layer.