Biophysical mechanisms leading to the formation of place fields in the hippocampus have not been fully explained. The novel hybrid simulation method used here combines phenomenological models of place field responses in entorhinal cortex, dentate gyrus, and CA3 with a realistic compartmental model of a single target CA3 pyramidal cell. Spike-timing dependent plasticity (STDP) and the neuromodulatory effects of acetylcholine (ACh) are included within the scope of the mode. A principal result is that, under the constraints of the model, synaptic plasticity is sufficient for forming place field responses, but is not sufficient to reproduce stable place fields. This is true even when novelty dependent changes in ACh concentrations are included, suggesting that currently unrecognized pathways play a key role in regulating synaptic plasticity in CA3. The model also provides insight into the origins and significance of theta phase precession whereby the theta phase of hippocampal place cell firing advances as the place field is traversed. Potential applications of the hybrid simulation method used here include the study of neuromodulatory deficiencies that may play a role in diseases of learning and memory.