Local circuit architecture facilitates the emergence of feature selectivity in the cerebral cortex. In the hippocampus, it remains unknown whether local computations supported by specific connectivity motifs regulate the spatial receptive fields of pyramidal cells. Here we developed an in vivo electroporation method for monosynaptic retrograde tracing and optogenetics manipulation at single-cell resolution to interrogate the dynamic interaction of place cells with their microcircuitry during navigation. We found a local circuit mechanism in CA1 whereby the spatial tuning of an individual place cell can propagate to a functionally recurrent subnetwork to which it belongs. The emergence of place fields in individual neurons led to the development of inverse selectivity in a subset of their presynaptic interneurons, and recruited functionally coupled place cells at that location. Thus, the spatial selectivity of single CA1 neurons is amplified through local circuit plasticity to enable effective multi-neuronal representations that can flexibly scale environmental features locally without degrading the feedforward input structure.