Nefiracetam, a pyrrolidone derivative developed as an anti-dementia drug, persistently potentiated currents through neuronal nicotinic acetylcholine (ACh) receptors (alpha7, alpha4beta2) expressed in Xenopus oocytes, and the potentiation was blocked by either the selective protein kinase C (PKC) inhibitors, GF109203X and staurosporine, or co-expressed active PKC inhibitor peptide. In primary cultures of rat hippocampal neurons, nefiracetam increased the rate of nicotine-sensitive miniature excitatory postsynaptic currents, without affecting the amplitude, and the increase was inhibited by GF109203X. In addition, the drug caused a marked increase in the glutamate release from electrically stimulated guinea pig hippocampal slices, and the effect was abolished by the nicotinic ACh receptor antagonists, alpha-bungarotoxin and mecamylamine. Nefiracetam induced a long-lasting facilitation of synaptic transmission in both the CA1 area and the dentate gyrus of rat hippocampal slices, and the facilitation was inhibited by alpha-bungarotoxin and mecamylamine. Such facilitatory action was still found in the hippocampus with selective cholinergic denervation. The results of the present study, thus, suggest that nefiracetam enhances activity of nicotinic ACh receptors by interacting with a PKC pathway, thereby increasing glutamate release from presynaptic terminals, and then leading to a sustained facilitation of hippocampal neurotransmission. This may represent a cellular mechanism underlying the cognition-enhancing action of nefiracetam. The results also provide the possibility that nefiracetam could be developed as a promising therapeutic drug for senile dementia or Alzheimer's disease.