Recognition of the involvement of cholinergic neurons in the modulation of cognitive functions and their severe dysfunction in neurodegenerative disorders, such as Alzheimer's disease, initiated immense research efforts aimed at unveiling the anatomical organization and cellular characteristics of the basal forebrain (BFB) cholinergic system. Concomitant with our unfolding knowledge about the structural and functional complexity of the BFB cholinergic projection system, multiple pharmacological strategies were introduced to rescue cholinergic nerve cells from noxious attacks; however, a therapeutic breakthrough is still awaited. In this review, we collected recent findings that significantly contributed to our better understanding of cholinergic functions under disease conditions, and to the design of effective means to restore lost or damaged cholinergic functions. To this end, we first provide a brief survey of the neuroanatomical organization of BFB nuclei with emphasis on major evolutionary differences among mammalian species, in particular rodents and primates, and discuss limitations of the translation of experimental data to human therapeutic applications. Subsequently, we summarize the involvement of cholinergic dysfunction in the pathogenesis of severe neurological conditions, including stroke, traumatic brain injury, virus encephalitis and Alzheimer's disease, and emphasize the critical role of pro-inflammatory cytokines as common mediators of cholinergic neuronal damage. Moreover, we review leading functional concepts on the limited recovery of cholinergic neurons and their impaired plastic re-modeling, as well as on the hampered interplay of the ascending cholinergic and monoaminergic projection systems under neurodegenerative conditions. In addition, recent advances in the dynamic labeling of living cholinergic neurons by fluorochromated antibodies, referred to as in vivo labeling, and novel neuroimaging approaches as potential diagnostic tools of progressive cholinergic decline are surveyed. Finally, the potential of cell replacement strategies using embryonic and adult stem cells, and multipotent neural progenitors, as a means to recover damaged cholinergic functions, is discussed.