Serotonergic suppression of cholinergic neuronal activity implicated in the regulation of rapid eye movement sleep and its associated phenomenon, pontogeniculooccipital waves, has long been postulated, but no direct proof has been available. In this study, intracellular and whole-cell patch-clamp recording techniques were combined with enzyme histochemistry to examine the intrinsic electrophysiological properties and response to serotonin (5-HT) of identified cholinergic rat laterodorsal tegmental nucleus neurons in vitro. Sixty-five percent of the recorded neurons demonstrated a prominent low-threshold burst, and of these, 83% were cholinergic. In current-clamp recordings 64% of the bursting cholinergic neurons tested responded to the application of 5-HT with a membrane hyperpolarization and decrease in input resistance. This effect was mimicked by application of the selective 5-HT type 1 receptor agonist carboxamidotryptamine maleate. Whole-cell patch-clamp recordings revealed that the hyperpolarizing response was mediated by an inwardly rectifying K+ current. Application of 5-HT decreased excitability and markedly modulated the discharge pattern of cholinergic bursting neurons: during a 5-HT-induced hyperpolarization these neurons exhibited no rebound burst after hyperpolarizing current input and a burst in response to depolarizing current input. In the absence of 5-HT, the relatively depolarized cholinergic bursting neurons responded to an identical hyperpolarizing current input with a burst and did not produce a burst after depolarizing current input. These data provide a cellular and molecular basis for the hypothesis that 5-HT modulates rapid eye movement sleep phenomenology by altering the firing pattern of bursting cholinergic neurons.