Hippocampal interneurons (INs) play a fundamental role in regulating neural oscillations, modulating excitatory circuits, and shaping spatial representation. While historically overshadowed by excitatory pyramidal cells in spatial coding research, recent advances have demonstrated that inhibitory INs not only coordinate network dynamics but also contribute directly to spatial information processing. This review aims to provide a novel integrative perspective on how distinct IN subtypes participate in spatial coding and how their dysfunction contributes to cognitive deficits in neurological disorders such as epilepsy, Alzheimer's disease (AD), traumatic brain injury (TBI), and cerebral hypoxia-ischemia. We synthesize recent findings demonstrating that different IN classes-including parvalbumin (PV)-, somatostatin (SST)-, cholecystokinin (CCK)-, and calretinin (CR)-expressing neurons-exhibit spatially selective activity, challenging traditional views of spatial representation, and influence memory consolidation through network-level interactions. By leveraging cutting-edge techniques such as in vivo calcium imaging and optogenetics, new evidence suggests that INs encode spatial information with a level of specificity previously attributed only to pyramidal cells. Furthermore, we investigate the impact of inhibitory circuit dysfunction in neurological disorders, examining how disruptions in interneuronal activity lead to impaired theta-gamma coupling, altered sharp wave ripples, and destabilized place cell representations, ultimately resulting in spatial memory deficits. This review advances the field by shifting the focus from pyramidal-centered models to a more nuanced understanding of the hippocampal network, emphasizing the active role of INs in spatial coding. By highlighting the translational potential of targeting inhibitory circuits for therapeutic interventions, we propose novel strategies for restoring hippocampal network function in neurological conditions. Readers will gain a comprehensive understanding of the emerging role of INs in spatial representation and the critical implications of their dysfunction, paving the way for future research on interneuron-targeted treatments for cognitive disorders.