The memory disturbance of senile dementia of Alzheimer type has been thought to associate with marked degeneration and loss of cholinergic neurons of the basal forebrain (nucleus basalis of Meynert, NBM). Electrical or chemical destruction of the NBM causes memory deficits in rats. After unilateral lesioning of the NBM in adult rats with excitotoxic amino acid, kainic acid, basal forebrain cells of fetal rats were transplanted through a microsyringe needle, the tip of which was transcortically inserted to the subarachnoid space. Eight weeks after the transplantation, passive avoidance response test was performed, and the response was compared with those of non-transplanted lesioned rats and of non-operated control rats. Although acquisition impairment did not improve, retention impairment was significantly ameliorated in the transplanted rats. Transplanted fetal neurons survived and grew very well over the cortical surface and exhibited facilitated neuritic elongation (acetylcholinesterase staining), but the neurites penetrating the intact pia mater were not verified. Choline acetyltransferase-immunoreactive neurons were found along the needle tract as well as in the subarachnoidal graft. The innervated neurites from the needle tract were rare. The results indicate that the re-innervation from the graft to the host cortex is not necessarily indispensable for improvement of memory deficit due to injury of the NBM. We suppose that the diffusional supply of neurotransmitters and/or their synthetic enzymes and some kinds of neuronotrophic factors is more important. Moreover, we emphasize the participation of astroglias, which are simultaneously transplanted with neurons, in production of neuronotrophic factors.