The regulation of the innate immune response is critical for controlling inflammation and for the prevention and treatment of diseases. We recently demonstrated that the efferent vagus nerve inhibits pro-inflammatory cytokine release and protects against systemic inflammation, and termed this vagal function "the cholinergic anti-inflammatory pathway." The discovery that the innate immune response is regulated partially through this neural pathway provides a new understanding of the mechanisms that control inflammation. In this review, we outline the cholinergic anti-inflammatory pathway and summarize the current insights into the mechanisms of cholinergic modulation of inflammation. We also discuss possible clinical implications of vagus nerve stimulation and cholinergic modalities in the treatment of inflammatory diseases.