Estrogen replacement in postmenopausal women may help prevent or delay development of Alzheimer's disease. Because loss of basal forebrain cholinergic neurons with reductions in choline acetyltransferase (ChAT) concentration are associated with Alzheimer's disease, we investigated the effect of estradiol (E(2)) and J 861, a non-feminizing estrogen, on cholinergic neurons in the basal forebrain. Ovariectomized rats received E(2), J 861 or vehicle, and basal forebrain sections through the substantia innominata, medial septum, and nucleus of the diagonal band were immunostained for ChAT. ChAT-immunoreactive cells in the basal forebrain were significantly reduced in the ovariectomized rats compared to intact rats, but those ovariectomized rats receiving estrogen replacement with E(2) and J 861 had near normal levels of ChAT-positive neurons. While retrograde tracing experiments with fluorogold injected into the prefrontal cortex showed no significant differences in the number of fluorogold-labeled cells among the groups, ChAT-immunoreactive cells and double-labeled cells were significantly lower in OVX rats than in intact and E(2) rats. Some substantia innominata cells in the J 861 rats were ChAT/estrogen receptor alpha-positive. These results suggest that E(2) and J 861 have positive effects on cholinergic neurons that project from the basal nucleus to the forebrain cortex.