Rat embryonic hippocampal neurons were cultured in (1) 3D collagen hydrogels as 'entrapped' evenly distributed cells, (2) at the interface of two collagen layers (sandwich model), and (3) on the surface of collagen coated coverslips (2D model). In the 'entrapment' model the neuronal processes grew out of the plane of the cell body and extended into the collagen matrix, in contrast to the sandwich model where the cells and their processes rarely left the plane in which they were seeded. Hippocampal neurons 'entrapped' in the 3D collagen gel grew the same number, but shorter, processes and exhibited improved survival compared to neurons cultured in the 2D model. There was no difference in the electrophysiological properties of the neurons cultured in the 3D compared to the 2D model except in the resting membrane potential and in the duration of the after-hyperpolarization. Spontaneous postsynaptic currents were recorded in 14- and 21-day-old 3D cultures evidencing functional synapse formation. Our results indicate that the physiological characteristics of 3D neuronal cultures are similar to traditional 2D cultures. However, functional 3D networks of hippocampal neurons will be necessary for multi-level circuit formation, which could be essential for understanding the basis of physiological learning and memory.