Abstract Orientation in space is represented in specialized brain circuits. Persistent head direction signals are transmitted from anterior thalamus to the presubiculum, but the identity of the presubicular target neurons, their connectivity and function in local microcircuits are unknown. Here, we examine how thalamic afferents recruit presubicular principal neurons and Martinotti interneurons, and the ensuing synaptic interactions between these cells. Pyramidal neuron activation of Martinotti cells in superficial layers is strongly facilitating such that high-frequency head directional stimulation efficiently unmutes synaptic excitation. Martinotti-cell feedback plays a dual role: precisely timed spikes may not inhibit the firing of in-tune head direction cells, while exerting lateral inhibition. Autonomous attractor dynamics emerge from a modelled network implementing wiring motifs and timing sensitive synaptic interactions in the pyramidal—Martinotti-cell feedback loop. This inhibitory microcircuit is therefore tuned to refine and maintain head direction information in the presubiculum.