The hippocampus is critical for memory formation. The hypothalamic supramammillary nucleus (SuM) sends long-range projections to hippocampal area CA2. While the SuM-CA2 connection is critical for social memory, how this input acts on the local circuit is unknown. Using mice, we found that SuM axon stimulation elicited mixed excitatory and inhibitory responses in area CA2 pyramidal neurons (PNs). Parvalbumin-expressing basket cells were largely responsible for the feedforward inhibitory drive of SuM over area CA2. Inhibition recruited by the SuM input onto CA2 PNs increased the precision of action potential firing both in conditions of low and high cholinergic tone. Furthermore, SuM stimulation in area CA2 modulated CA1 activity, indicating that synchronized CA2 output drives a pulsed inhibition in area CA1. Hence, the network revealed here lays basis for understanding how SuM activity directly acts on the local hippocampal circuit to allow social memory encoding.