This study deals with two characteristic cell types in the rat septal complex i.e., cholinergic and GABAergic neurons, and their synaptic connections. Cholinergic elements were labeled with a monoclonal antibody against choline acetyltransferase (ChAT), the acetylcholine synthesizing enzyme. Antiserum against glutamate decarboxylase (GAD), the GABA synthesizing enzyme, was employed to identify GABAergic perikarya and terminals, by using either the peroxidase-antiperoxidase (PAP) technique or a biotinylated second antiserum and avidinated gold or ferritin. With these contrasting immunolabels we have studied the cholinergic-GABAergic interconnections in double-labeled sections of intact septal regions and the GABAergic innervation of medial septal area cholinergic neurons in sections taken from animals 1 week following lateral septal area lesion. In other electron microscopic experiments we have studied cholinergic and GABAergic neurons in the septal complex for synaptic contacts with hippocamposeptal fibers, which were identified by anterograde degeneration following fimbria-fornix transection. Our results are summarized as follows: (1) GAD-positive terminals form synaptic contacts on ChAT-immunoreactive dendrites in the medial septum/diagonal band complex (MSDB), (2) surgical lesion of the lateral septal area resulted in a dramatic decrease of the number of GABAergic boutons on MSDB cholinergic neurons, (3) cholinergic terminals establish synaptic contacts with GAD immunoreactive cell bodies and proximal dendrites in the MSDB as well as in the lateral septum (LS), (4) degenerated terminals of hippocampo-septal fibers were mainly observed in the LS, where they formed asymmetric synaptic contacts on dendrites of GABAergic neurons and on nonimmunoreactive spines. We did not observe degenerated boutons in contact with ChAT-positive dendrites or cell bodies in the MSDB. From these results and from data in the literature we conclude that excitatory hippocampo-septal fibers activate GABAergic cells, and as yet unidentified spiny neurons in the LS, which may control the discharge of medial septal cholinergic neurons known to project back to the hippocampal formation.