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A network model of the entorhinal cortex layer II that consisted of stellate cells and an interneuron was constructed. The stellate cell reproduced subthreshold oscillations in the theta range as observed in physiological experiments. The subthreshold oscillations were recurrently synchronized through an inhibitory interneuron, and theta rhythm was generated. Anatomical evidences suggest that the layers II and V of the entorhinal cortex and the hippocampus may form a loop circuit with a delay time of about 25 ms for signals going around. With the loop circuit introduced to the present model, the stellate cells that represent spatial information fired successively at intervals of 25 ms, in depolarized phases of the theta cycles. The present entorhinal cortex model with the loop circuits reproduced the phase precession, which has been observed experimentally as a characteristic of place cells.