How does attention interact with learning? Kruschke [Kruschke, J.K. (2001). Toward a unified Model of Attention in Associative Learning. J. Math. Psychol. 45, 812-863.] proposed a model (EXIT) that captures Mackintosh's [Mackintosh, N.J. (1975). A theory of attention: Variations in the associability of stimuli with reinforcement. Psychological Review, 82(4), 276-298.] framework for attentional modulation of associative learning. We developed a computational model that showed analogous interactions between selective attention and associative learning, but is significantly simplified and, in contrast to EXIT, is motivated by neurophysiological findings. Competition among input representations in the internal representation layer, which increases the contrast between stimuli, is critical for simulating these interactions in human behavior. Furthermore, this competition is modulated in a way that might be consistent with the phasic activation of the central cholinergic system, which modulates activity in sensory cortices. Specifically, phasic increases in acetylcholine can cause increased excitability of both pyramidal excitatory neurons in cortical layers II/III and cortical GABAergic inhibitory interneurons targeting the same pyramidal neurons. These effects result in increased attentional contrast in our model. This model thus represents an initial attempt to link human attentional learning data with underlying neural substrates.