The medial septum diagonal band complex (MS/DB) projects via cholinergic and GABAergic pathways to the hippocampus and plays a key role in the hippocampal theta rhythm. In the MS/DB we have previously described a population of fast spiking GABAergic neurons that contain parvalbumin and mediate theta frequency activity in vitro. The Kv3.1 potassium channel is a delayed rectifier channel that plays a major role in fast spiking neurons in the CNS, and has previously been localized in the MS/DB. To determine which cell types in the MS/DB express the Kv3.1b ion channel subunit, transgenic mice in which the expression of GABAergic and glutamate markers are associated with the expression of green fluorescent protein (GFP; GAD67-GFP and VGluT2-GFP mice, respectively) were used for immunofluorescence and axonal tract tracing. Electrophysiological studies were also carried out on rat MS/DB slices to examine the role of the Kv3.1 channel in theta frequency oscillations. The results for the MS/DB were as follows: (1) cholinergic cells did not express GFP in either GAD67-GFP or VGluT2-GFP mice, and there was GAD67 immunoreactivity in GFP-positive neurons in GAD67-GFP mice and in a small proportion (6%) of GFP-positive neurons in VGluT2-GFP mice. (2) Kv3.1b immunofluorescence was associated with the somata of GABAergic neurons, especially those that contained parvalbumin, and with a minority of glutamatergic neurons, but not with cholinergic neurons, and with GABAergic axonal terminal-like processes around certain GABAergic neurons. (3) Both Kv3.1b-positive and -negative GABAergic neurons were septo-hippocampal, and there was a minor projection to hippocampus from VGluT2-GFP neurons. (4) Kainate-induced theta oscillations in the MS/DB slice were potentiated rather than inhibited by the Kv3.1 blocker 4-aminopyridine, and this agent on its own produced theta frequency oscillations in MS/DB slices that were reduced by ionotropic glutamate and GABA receptor antagonists and abolished by low extracellular calcium. These studies confirm the presence of heterogeneous populations of septo-hippocampal neurons in the MS/DB, and suggest that presence of Kv3.1 in the GABAergic neurons does not contribute to theta activity through fast spiking properties, but possibly by the regulation of transmitter release from axonal terminals.