Recurrent inhibitory loops are simple neuronal circuits found in the central nervous system, yet little is known about the physiological rules governing their activity. Here we use simultaneous somatic and dendritic recordings in rat hippocampal slices to show that during a series of action potentials in pyramidal cells recurrent inhibition rapidly shifts from their soma to the apical dendrites. Two distinct inhibitory circuits are sequentially recruited to produce this shift: one, time-locked with submillisecond precision to the onset of the action potential series, transiently inhibits the somatic and perisomatic regions of pyramidal cells; the other, activated in proportion to the rate of action potentials in the series, durably inhibits the distal apical dendrites. These two operating modes result from the synergy between pre- and postsynaptic properties of excitatory synapses onto recurrent inhibitory neurons with distinct projection patterns. Thus, the onset of a series of action potentials and the rate of action potentials in the series are selectively captured and transformed into different spatial patterns of recurrent inhibition.