Several studies suggest that neurons from the lateral region of the SuM (SuML) innervating the dorsal dentate gyrus (DG) display a dual GABAergic and glutamatergic transmission and are specifically activated during paradoxical (REM) sleep (PS). The objective of the present study is to characterize the anatomical, neurochemical and electrophysiological properties of the SuML-DG projection neurons and to determine how they control DG oscillations and neuronal activation during PS and other vigilance states. For this purpose, we combine structural connectivity techniques using neurotropic viral vectors (rabies virus, AAV), neurochemical anatomy (immunohistochemistry, in situ hybridization) and imaging (light, electron and confocal microscopy) with in vitro (patch clamp) and in vivo (LFP, EEG) optogenetic and electrophysiological recordings performed in transgenic VGLUT2-cre male mice. At the cellular level, we show that the SuML-DG neurons co-release GABA and glutamate on dentate granule cells and increase the activity of a subset of DG granule cells. At the network level, we show that activation of the SuML-DG pathway increases theta power and frequency during PS as well as gamma power during PS and waking in the DG. At the behavioral level, we show that the activation of this pathway does not change animal behavior during PS, induces awakening during slow wave sleep and increases motor activity during waking. These results suggest that the SuML-DG pathway is capable of supporting the increase of theta and gamma power in the DG observed during PS and plays an important modulatory role of DG network activity during this state.