Previous efforts aimed at attributing discrete behavioral functions to cortical cholinergic afferents have not resulted in a generally accepted hypothesis about the behavioral functions mediated by this system. Moreover, attempts to develop such a unifying hypothesis have been presumed to be unproductive considering the widespread innervation of the cortex by basal forebrain cholinergic neurons. In contrast to previous descriptions of the role of cortical acetylcholine (ACh) in specific behavioral phenomena (e.g., mediation of the behavioral effects of reward loss) or mnemonic entities (e.g., working or reference memory), cortical ACh is hypothesized to modulate the general efficacy of the cortical processing of sensory or associational information. Specifically, cortical cholinergic inputs mediate the subjects' abilities to detect and select stimuli and associations for extended processing and to allocate the appropriate processing resources to these functions. In addition to evidence from electrophysiological and behavioral studies on the role of cortical ACh in sensory information processing and attention, this hypothesis is consistent with proposed functions of the limbic and paralimbic networks in regulating the activity of the basal forebrain cholinergic neurons. Finally, while the proposed hypothesis implies that changes in activity in cortical ACh simultaneously occur throughout the cortex, the selectivity and precision of the functions of cholinergic function is due to its coordinated interactions with the activity of converging sensory or associational inputs. Finally, the dynamic, escalating consequences of alterations in the activity of cortical ACh (hypo- and hyperactivity) on cognitive functions are evaluated.