In this study we segment the hippocampus according to functional connectivity assessed from resting state functional magnetic resonance images in healthy subjects and in patients with Alzheimer's disease (AD). We recorded the resting FMRI signal from 16 patients and 22 controls. We used seed-based functional correlation analyses to calculate partial correlations of all voxels in the hippocampus relative to characteristic regional signal changes in the thalamus, the prefrontal cortex (PFC) and the posterior cingulate cortex (PCC), while controlling for ventricular CSF and white matter signals. Group comparisons were carried out controlling for age, gender, hippocampal volume and brain volume. The strength of functional connectivity in each region also was correlated with neuropsychological measures. We found that the hippocampus can be segmented into three distinct functional subregions (head, body, and tail), according to the relative connectivity with PFC, PCC and thalamus, respectively. The AD group showed stronger hippocampus-PFC and weaker hippocampus-PCC functional connectivity, the magnitudes of which correlated with MMSE in both cases. The results are consistent with an adaptive role of the PFC in the context of progression of dysfunction in PCC during earlier stages of AD. Extension of our approach could integrate regional volume measures for the hippocampus with their functional connectivity patterns in ways that should increase sensitivity for assessment of AD onset and progression.