Hippocampal theta oscillations coordinate neuronal firing to support memory and spatial navigation. The medial septum (MS) is critical in theta generation by two possible mechanisms: either a unitary ‘pacemaker’ timing signal is imposed on the hippocampal system or it may assist in organizing subcircuits within the phase space of theta oscillations. We used temperature manipulation of the MS to confront these models. Cooling of the MS reduced both theta frequency and power, was associated with enhanced incidence of errors in a spatial navigation task, but did not affect the spatial map. MS cooling decreased theta frequency oscillations of place cells, reduced distance-time compression but preserved distance-phase compression of place field sequences within the theta cycle. We suggest that reciprocal MS-hippocampal communication is essential for sustaining theta phase-coordination of cell assemblies and, in turn, supporting its role in spatial memory.