The medial septal diagonal band area (MS/DB), made up of GABAergic and cholinergic neurones, plays an essential role in the generation and modulation of the hippocampal theta rhythm. To understand the part that the cholinergic neurones might play in this activity, we sought to determine whether postsynaptic nicotinic receptor responses can be detected in slices of the rodent MS/DB by puffing on acetylcholine (ACh). Neurones were characterized electrophysiologically into GABAergic and cholinergic neurones according to previous criteria. Responses of the MS/SB neurones to ACh were various combinations of fast depolarizations (1.5–2.5 s), fast hyperpolarizations (3–4 s) and slow depolarizations (20–30 s), the latter two being blocked by atropine. The fast depolarizations were partially or not blocked with cadmium and low calcium, tetrodotoxin, and antagonists of other ionotropic receptors, and were antagonized with 25 μm mecamylamine. Pharmacological investigation of the responses showed that the α7* nicotinic receptor type is associated with cholinergic neurones and 10% of the GABAergic neurones, and that nonα7* nicotinic receptor subtypes are associated with 50% of the GABAergic neurones. Pharmacological dissection of evoked and spontaneous postsynaptic responses, however, did not provide evidence for synaptic nicotinic receptor transmission in the MS/DB. It was concluded that nicotinic receptors, although prevalent on the somatic and/or dendritic membrane compartments of neurones in the MS/DB, are on extrasynaptic sites where they presumably play a neuromodulatory role. The presence of α7* nicotinic receptors on cholinergic neurones may also render these cells specifically vulnerable to degeneration in Alzheimer's disease.