Theta rhythm and long-term potentiation (LTP) are 2 remarkable discoveries. The theta rhythm is an oscillatory neural activity of 3-10 Hz in the hippocampus. LTP is implicated as a cellular basis of memory, but the function of theta oscillation in memory is not clear. This review suggests that theta rhythm bestows optimal conditions for hippocampal LTP and memory encoding. Theta rhythm in hippocampal CA1 is generated mainly by 2 oscillating dipoles-somatic-inhibition and phase-shifted, distal dendritic excitation, with a smaller contribution by rhythmic proximal (CA3) excitation and distal inhibition. Our recent study showed that LTP of the excitatory synapses on the basal or apical dendrites of CA1 pyramidal cells peaked twice in a theta cycle, at the rising (R) and the midcycle (M) phase of the theta rhythm recorded at the distal apical dendrites. In contrast, evoked population spike excitability peaked at a single phase near the midcycle. We infer that R and M peaks of LTP correspond to maximal dendritic depolarization and maximal somatic depolarization of CA1 pyramidal cells, respectively. A ∼50° phase shift between LTP-versus-theta-phase functions suggests independent LTP at the basal and apical dendrites. It is argued that theta phase-dependent LTP occurs under physiological conditions, by pairing presynaptic activity with oscillating postsynaptic depolarization. Place cells, showing intrinsic membrane potential oscillations, are ideal LTP participants. It is suggested that theta phase-dependent LTP contributes to memory encoding, and disruption of either theta oscillation or LTP may disrupt memory in various neurological disorders, including epilepsy and Alzheimer's disease. (PsycInfo Database Record (c) 2021 APA, all rights reserved).