The sleeping rat cycles between two well-characterized physiological states, slow-wave sleep (SWS) and rapid-eye-movement sleep (REM), often identified by the presence of large-amplitude irregular activity (LIA) and theta activity, respectively, in the hippocampal EEG. Inspection of the activity of ensembles of hippocampal CA1 complex-spike cells along with the EEG reveals the presence of a third physiological state within SWS. We characterize the hippocampal EEG and population activity of this third state relative to theta activity and LIA, its incidence relative to REM and LIA, and the functional correlates of its population activity. This state occurs repeatedly within stretches of SWS, occupying approximately 33% of SWS and approximately 20% of total sleep, and it follows nearly every REM episode; however, it never occurs just before a REM episode. The EEG during this state becomes low in amplitude for a few seconds, probably corresponding to "small-amplitude irregular activity" (SIA) described in the literature; we will call its manifestation during sleep "S-SIA." During S-SIA, a small subset of cells becomes active, whereas the rest remain nearly silent, with the same subset of cells active across long sequences of S-SIA episodes. These cells are physiologically indistinguishable from ordinary complex-spike cells; thus, the question arises as to whether they have any special functional correlates. Indeed, many of these cells are found to have place fields encompassing the location where the rat sleeps, raising the possibility that S-SIA is a state of increased alertness in which the animal's location in the environment is represented in the brain.