Continuous attractor networks are believed to support various cognitive functions, from working memory to spatial representations, yet the neuronal dynamics and circuits supporting these dynamics in vivo remain unclear. One example of such networks is the head-direction (HD) circuit, a crucial signal for navigation. It is represented by HD cells, which each fire for a specific direction of the animal’s head, and is transmitted to the cortex by the anterodorsal nucleus (ADN) of the thalamus where a vast majority of neurons are modulated by HD. ADn HD cells maintain their mutual coordination during sleep, when sensory inputs are virtually absent, supporting the view of an attractor-driven system. The rigid organization of HD cell activity in the ADn begs the question of the origin of these structured patterns. Specifically, it has been proposed that the upstream structure, the lateral mammillary nucleus (LMN), is a central component of the HD signal generator circuit. We thus investigated the organization of LMN ensemble activity across brain states, and its relationship to ADn activity. To this end, we recorded LMN neuronal ensembles during exploration and sleep. The organization of LMN showed two opposite regimes: during Rapid Eye Movement (REM) sleep, when brain’s activity is virtually indistinguishable from wake, HD cells in the LMN were coordinated exactly as during exploration - and as in the ADn. In contrast, during non-REM sleep, the coordination of LMN HD cells was reduced while simultaneously recorded ADn neurons maintained the same level of mutual coherence as during wake and REM. The decreased level of correlation in the LMN resulted, at least in part, by a switch to hypersynchronous spiking activity in which neurons co-fired irrespective of their mutual preferred direction. This observation suggests that the HD thalamocortical circuit supports attractor dynamics independent of its inputs.