Intracellular recordings were obtained from neurons in pontine reticular formation slices of the rat to characterize a cholinergic- gated increase in conductance. The conductance increase was associated with a hyperpolarization of the membrane potential and with an outward current under voltage-clamp conditions. Current-voltage relations and potassium substitution experiments indicated mediation by a change in permeability, primarily to potassium. This potassium conductance exhibited inward rectification at membrane potentials negative to resting potential, a novel finding for cholinergic actions in CNS neurons. Further characterization of this inwardly rectifying potassium conductance revealed marked sensitivity to low concentrations of barium. Cholinergically evoked currents were relatively unaffected by the presence of extracellular cesium. Cholinergic effects persisted in TTX. The outward currents elicited by carbachol or methacholine were blocked only by high concentrations of pirenzepine, a selective antagonist of the M1 muscarinic receptor. The interaction between these agents is quantitatively consistent with cholinergic action at postsynaptic muscarinic receptors of the non-M1 subtype.