The hippocampal CA3 subregion is a densely connected recurrent circuit that supports memory by generating and storing sequential neuronal activity patterns that reflect recent experience. While theta phase precession is thought to be critical for generating sequential activity during memory encoding, the circuit mechanisms that support this computation across hippocampal subregions are unknown. By analyzing CA3 network activity in the absence of each of its theta-modulated external excitatory inputs, we show necessary and unique contributions of the dentate gyrus (DG) and the medial entorhinal cortex (MEC) to phase precession. DG inputs are essential for preferential spiking of CA3 cells during late theta phases and for organizing the temporal order of neuronal firing, while MEC inputs sharpen the temporal precision throughout the theta cycle. A computational model that accounts for empirical findings suggests that the unique contribution of DG inputs to theta-related spike timing is supported by targeting precisely timed inhibitory oscillations. Our results thus identify a novel and unique functional role of the DG for sequence coding in the CA3 circuit.