In this paper, we propose a model of predictive learning in the septal-hippocampal region of the brain. We suggest that this region plays a primary role in monitoring the stability of the sensory cues that an animal receives from the external world, in relation to its own internally generated knowledge of its location, direction of gaze, and direction of movement. Our predictive model of information processing is based on the synaptic potentiation of hippocampal pyramidal cells during temporally asymmetric pairing of EPSPs and back-propagating action potentials. The model demonstrates that such potentiation of the synapses that the mossy" fibre projections from the dentate gyms make with pyramidal cells in the CA3 region of the hippocampus can cause a gradual shift backward in time of the postsynaptic activity of the CA3 cells, thus making their activity predictive of the upcoming sensory state of the animal. This is predictive activity has been observed experimentally in the firing of "place" cells in rat hippocampus, which corresponds initially to the rat being in a particular location. After repetitive experience, these cells begin to fire before the rat reaches this location, causing an apparent backward shift in space of the "place" field of the cell. The model offers both an explanation of this phenomenon, and more generally, a possible basis for further understanding of the role of the septal-hippocampal region in learning and memory.