Brain cholinergic neurons are critical for memory function and their loss may contribute to memory impairment in Alzheimer's disease. One role of cholinergic neurons is to elicit an oscillatory activity called theta rhythm in the hippocampus, a brain region involved in memory processing. Theta rhythm occurs during periods of learning, but its effect on the synaptic plasticity that underlies learning remains unclear. We have studied synaptic plasticity in hippocampal slices during theta-frequency oscillations induced by a cholinergic agonist. Here we report that during these oscillations, synapses are in a state of heightened plasticity and can be modified by what would otherwise be ineffective stimulation. This heightened plasticity is sensitive to the timing of incoming stimuli with respect to the oscillatory activity. The results suggest that cholinergic systems may affect memory formation through the induction of an oscillatory state in which the requirements for synaptic plasticity are dramatically altered.