Acetylcholine activates both nicotinic and muscarinic receptors in the central nervous system. Although the action of acetylcholine at muscarinic receptor has been well characterized, relatively little is known at the cellular level concerning nicotinic receptor stimulation in brain. Central nicotinic receptors have been implicated in Alzheimer's disease, seizure activity, the generation of slow-wave theta rhythm in the hippocampus and the potential abuse liability of nicotine. At the neuronal level, nicotinic agonists have been most often associated with postsynaptically mediated excitation and membrane depolarization at various sites, including Renshaw spinal motoneurons, locus coeruleus and the medial habenular nucleus. Nicotine acting presynaptically can produce either excitation or inhibition indirectly through the release of endogeneous transmitters or modulators. Whereas a direct inhibitory effect of nicotine has been suggested by one in vivo extracellular recording study in rat cerebellar Purkinje neurons, the mechanism(s) underlying this action is not yet known. We now report our findings obtained using in vitro intracellular methods in a submerged brain slice preparation in which application of nicotinic agonists to rat dorsolateral septal neurons reveal a direct membrane hyperpolarization mediated by an increase in potassium conductance.