There is considerable evidence to suggest that the activity of forebrain and mesopontine cholinergic neurons is intimately involved in electroencephalographic arousal. Furthermore, our previous in vitro investigation suggested that both cholinergic systems are under a powerful tonic inhibitory control by endogenous adenosine. We thus examined the in vivo effect, on electrographically defined behavioral states, of microdialysis perfusion of adenosine into the cholinergic zones of the substantia innominata of the basal forebrain and the laterodorsal tegmental nucleus of freely moving cats. Localized perfusion of adenosine into either the basal forebrain or the laterodorsal tegmental nucleus caused a marked alteration in sleep-wake architecture. Adenosine (300 microM) perfused into either the basal forebrain or laterodorsal tegmental nucleus produced a dramatic decrease in waking, to about 50% of the basal level. Perfusion into the basal forebrain resulted in a significant increase in rapid eye movement sleep, while slow wave sleep was unchanged. In contrast, adenosine perfusion into the laterodorsal tegmental nucleus produced an increase of both slow wave sleep and rapid eye movement sleep, the magnitude of which were proportional to the decrease in waking. Electroencephalographic power spectral analysis showed that adenosine perfusion into the basal forebrain increased the relative power in the delta frequency band, whereas higher frequency bands (theta, alpha, beta and gamma) showed a decrease. These data strongly support the hypothesis that adenosine might play a key role as an endogenous modulator of wakefulness and sleep. The decrease in wakefulness may be directly related to the inhibition of cholinergic neurons of the basal forebrain and the laterodorsal tegmentum. The increase in rapid eye movement sleep is a novel but robust effect whose origin, at present, is uncertain. The observation that local perfusion of adenosine into either the basal forebrain or the laterodorsal tegmental nucleus dramatically decreases wakefulness suggests that these areas might represent a major site of action of the xanthine stimulants (adenosine antagonists) found in coffee and tea.