Neurons in the magnocellular nucleus of the caudal basal forebrain extend an axonal projection which arborizes within the reticular nucleus of the thalamus. The present study addresses the ultrastructure and neurochemistry of this projection in rats. Many labeled terminals are apparent within the thalamic reticular nucleus following Phaseolus vulgaris leucoagglutinin injections into the caudal basal nucleus; anterogradely labeled axon terminals most commonly contact both somata and dendrites of reticular nucleus neurons with symmetric membrane specializations. Thus, the majority of the labeled terminals examined contrast with choline acetyltransferase positive terminals which have been previously identified as contacting dendrites and forming asymmetric synapses within this nucleus. Many of the neurons within the caudal basal nucleus which are retrogradely labeled following tracer injections into the thalamic reticular nucleus are gamma-aminobutyric acid (GABA) immunoreactive. In addition, following injections of Phaseolus vulgaris leucoagglutinin or fluoro-ruby into the caudal basal forebrain, some of the labeled axonal swellings and boutons within the thalamic reticular nucleus also contain glutamic acid decarboxylase. These results indicate that a significant component of the projection is GABAergic. These anatomical observations suggest that the projection from the caudal basal nucleus onto the thalamic reticular nucleus could facilitate the relay of information through the dorsal thalamus by inhibiting reticular nucleus neurons, and thus, in turn, disinhibiting thalamic relay neurons.