Unilateral injections of kainic acid into the basal forebrain in a series of rats resulted in an increase in large amplitude slow waves, a correlated burst-suppression pattern of multi-unit activity, and a decrease in acetylcholinesterase staining in the neocortex ipsilateral to the kainic acid injection. Subsequently, a cell suspension, prepared from rat embryonic basal forebrain tissue, was injected adjacent to the recording electrodes ipsilateral to the kainic acid injection. This produced a gradual recovery of low voltage fast activity (LVFA) and a correlated continuous discharge pattern of multi-unit activity in the neocortex ipsilateral to the kainic acid injection. LVFA recovered more slowly at neocortical recording sites that received an injection of a cell suspension of hippocampal primordial cells or no injection at all. Acetylcholinesterase-positive fibers from the basal forebrain tissue invaded host cortex; no comparable outrgrowths were demonstrable in the hippocampal primordium tissue grafts. Restoration of cholinergic electrocortical activation may play an important role in the improvements in behavioral performance produced by basal forebrain grafts in the cortex in animals with basal forebrain lesions.