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Olfactory oscillations may enhance cognitive processing through coupling with beta (β, 15–30 Hz) and gamma (γ, 30–160 Hz) activity in the hippocampus (HPC). We hypothesize that coupling between olfactory bulb (OB) and HPC oscillations is increased by cholinergic activation in control rats and is reduced in kainic‐acid‐treated epileptic rats, a model of temporal lobe epilepsy. OB γ2 (63–100 Hz) power was higher during walking and immobility‐awake (IMM) compared to sleep, while γ1 (30–57 Hz) power was higher during grooming than other behavioral states. Muscarinic cholinergic agonist pilocarpine (25 mg/kg ip) with peripheral muscarinic blockade increased OB power and OB‐HPC coherence at β and γ1 frequency bands. A similar effect was found after physostigmine (0.5 mg/kg ip) but not scopolamine (10 mg/kg ip). Pilocarpine increased bicoherence and cross‐frequency coherence (CFC) between OB slow waves (SW, 1–5 Hz) and hippocampal β, γ1 and γ2 waves, with stronger coherence at CA1 alveus and CA3c than CA1 stratum radiatum. Bicoherence further revealed a nonlinear interaction of β waves in OB with β waves at the CA1‐alveus. Beta and γ1 waves in OB or HPC were segregated at one phase of the OB‐SW, opposite to the phase of γ2 and γ3 (100–160 Hz) waves, suggesting independent temporal processing of β/γ1 versus γ2/γ3 waves. At CA1 radiatum, kainic‐acid‐treated epileptic rats compared to control rats showed decreased theta power, theta‐β and theta‐γ2 CFC during baseline walking, decreased CFC of HPC SW with γ2 and γ3 waves during baseline IMM, and decreased coupling of OB SW with β and γ2 waves at CA1 alveus after pilocarpine. It is concluded that β and γ waves in the OB and HPC are modulated by a slow respiratory rhythm, in a cholinergic and behavior‐dependent manner, and OB‐HPC functional connectivity at β and γ frequencies may enhance cognitive functions. [ABSTRACT FROM AUTHOR]