Head-direction (HD) cells fire as a function of an animal's directional heading in the horizontal plane during two-dimensional navigational tasks [1]. The information from HD cells is used with place and grid cells to form a spatial representation (cognitive map) of the environment [2, 3]. Previous studies have shown that when rats are inverted (upside down), they have difficulty learning a task that requires them to find an escape hole from one of four entry points but that they can learn it when released from one or two start points [4]. Previous reports also indicate that the HD signal is disrupted when a rat is oriented upside down [5, 6]. Here we monitored HD cell activity in the two-entry-point version of the inverted task and when the rats were released from a novel start point. We found that despite the absence of direction-specific firing in HD cells when inverted, rats could successfully navigate to the escape hole when released from one of two familiar locations by using a habit-associated directional strategy. In the continued absence of normal HD cell activity, inverted rats failed to find the escape hole when started from a novel release point. The results suggest that the HD signal is critical for accurate navigation in situations that require a flexible allocentric cognitive mapping strategy, but not for situations that utilize habit-like associative spatial learning.