Forebrain cholinergic dysfunction is the hallmark of vascular dementia (VaD) and Alzheimer's dementia (AD) induced by cerebral hypoperfusion during aging. The aim of the present study is to evaluate the role of angiotensin converting enzyme (ACE) in cerebral hypoperfusion-induced dementia and cholinergic dysfunction. Chronic cerebral hypoperfusion (CHP) was induced by permanent bilateral common carotid artery (2VO) occlusion in rats. Chronic cerebral hypoperfusion resulted in anterograde memory impairment revealed from Morris water maze (MWM) and passive avoidance step through tasks (PA), which was significantly attenuated by ACE inhibitor, captopril. Cerebral hypoperfusion down-regulated the relative expression of cholinergic muscarinic receptor (ChM-1r) and choline acetyltransferase (ChAT) as well as up-regulated the angiotensin II type-1 receptor (AT-1) expression in hippocampus of vehicle treated CHP group on the 54th day post-hypoperfusion. The diminished number of presynaptic cholinergic neurons and the pyramidal neurons were evident from ChAT-immunofluorescence and the hematoxylin and eosin (H&E) staining studies respectively in hippocampal Cornu ammonis1 (CA1); region of vehicle-treated hypoperfused animals. Further the lipid peroxidation level was also found to be elevated in the hippocampus of the vehicle-treated group. Our results demonstrated that continuous captopril treatment (50 mg/kg, i.p. twice daily) for 15 days mitigated the hypoperfusion-induced cholinergic hypofunction and neurodegeneration in hippocampus. The present study robustly reveals that the angiotensinergic system plays a pivotal role in progression of neuronal death and memory dysfunctions during cerebral hypoperfusion.