TRPV1 is an ion channel activated by heat and pungent agents including capsaicin, and has been extensively studied in nociception of sensory neurons. However, the location and function of TRPV1 in the hippocampus is debated. We found that TRPV1 is expressed in oriens-lacunosum-moleculare (OLM) interneurons in the hippocampus, and promotes excitatory innervation. TRPV1 knockout mice have reduced glutamatergic innervation of OLM neurons. When activated by capsaicin, TRPV1 recruits more glutamatergic, but not GABAergic, terminals to OLM neurons in vitro. When TRPV1 is blocked, glutamatergic input to OLM neurons is dramatically reduced. Heterologous expression of TRPV1 also increases excitatory innervation. Moreover, TRPV1 knockouts have reduced Schaffer collateral LTP, which is rescued by activating OLM neurons with nicotine-via α2β2-containing nicotinic receptors-to bypass innervation defects. Our results reveal a synaptogenic function of TRPV1 in a specific interneuron population in the hippocampus, where it is important for gating hippocampal plasticity.