Recent, convergent evidence places the anterior thalamic nuclei at the heart of diencephalic amnesia. However, the reasons for the severe memory loss in diencephalic amnesia remain unknown. A potential clue comes from the dense, reciprocal connections between the anterior thalamic nuclei and retrosplenial cortex, another region vital for memory. We now report a loss of synaptic plasticity [long-term depression (LTD)] in rat retrosplenial cortex slices months following an anterior thalamic lesion. The loss of LTD was lamina-specific, occurring only in superficial layers of the cortex and was associated with a decrease in GABA(A)-mediated inhibitory transmission. As retrosplenial cortex is itself vital for memory, this distal lesion effect will amplify the impact of anterior thalamic lesions. These findings not only provide novel insights into the functional pathology of diencephalic amnesia and have implications for the aetiology of the posterior cingulate hypoactivity in Alzheimer's disease, but also show how distal changes in plasticity could contribute to diaschisis.