Clinical trials show beneficial effects of acetylcholinesterase (AChE) inhibitors, including galantamine, on cognitive functions in patients with mild to moderate Alzheimer's disease. Galantamine shows a dual action profile by also acting as an allosteric modulator of nicotinic acetylcholine receptors. Nevertheless, its in vivo mechanism of action is only partly understood. Here, we first established a novel lesion model provoking significant functional impairment of the septo-hippocampal projection system without triggering massive neuronal death in the rat medial septum. Next, we studied whether galantamine, administered in doses of 1 and 3mg/kg post-lesion, promotes functional recovery of spatial navigation behaviors, and affects the output of septal cholinergic projections. Infusion of N-methyl-d-aspartate (NMDA; 30nmol/1microl) in the medial septum resulted in spatial learning deficits associated with significant shrinkage of cholinergic neurons and reduced AChE activity in the hippocampus at 7 days post-lesion. Galantamine treatment alone significantly increased the hippocampal acetylcholine concentration and attenuated the NMDA-induced spatial learning impairment. Galantamine post-treatment also affected NMDA-induced changes in AChE and choline-acetyltransferase activities. In conclusion, our data show that galantamine attenuates experimentally-induced cognitive impairments underscored by mild neuronal damage.