Slow, rhythmic membrane potential (Vm) fluctuations occur spontaneously in cortical neurons of urethane-anesthetized rats, and likely underlie EEG activity in the same low-frequency (1–4 Hz or delta) range. Nucleus basalis (NB) stimulation elicits neocortical activation, simultaneously modifying Vm and EEG fluctuations, by way of cortical muscarinic ACh receptors (Metherate et al., 1992). To investigate the nature of spontaneous fluctuations and their modification by NB stimulation, we have obtained intracellular recordings from auditory cortex using the whole-cell recording technique in vivo. Spontaneous Vm fluctuations appeared to contain three components whose polarity and time course resembled the EPSP, putative Cl(-)-mediated IPSP, and putative K(+)- mediated, long-lasting IPSP elicited by thalamic stimulation. The spontaneous, long-lasting hyperpolarization, whose rhythmic occurrence appeared to set the slow-wave rhythm, was associated with an increased conductance that could shunt the thalamocortical EPSP. We hypothesized that spontaneous Vm fluctuations arise from intermixed rapid depolarizations, rapid Cl(-)-mediated hyperpolarizations, and long- lasting, K(+)-mediated hyperpolarizations. NB-mediated cortical activation might then result from muscarinic suppression of K+ permeability, allowing the rapid depolarizations and Cl- fluxes to continue uninterrupted. Tests of this hypothesis showed that (1) intracellular blockade of K+ channels by rapid diffusion of Cs+ from the recording pipette resulted in suppression of spontaneous, long- lasting hyperpolarizations, mimicking the effect of NB stimulation, and reducing shunting of the thalamocortical EPSP; (2) effects of Cs+ and NB stimulation suggested overlapping, or converging, mechanisms of action; however, there were important differential effects on the spontaneous, long-lasting hyperpolarizations and the K(+)-mediated IPSP; and (3) modifying Cl- fluxes with intracellular picrotoxin or high intracellular Cl- concentrations resulted in spontaneous and NB- elicited large-amplitude depolarizations. We conclude that spontaneous, long-lasting hyperpolarizations are K+ fluxes, but are not “spontaneous” K(+)-mediated IPSPs. Since NB-mediated reduction of spontaneous hyperpolarizations implies muscarinic suppression of a K+ conductance, the spontaneous hyperpolarizations more likely result from the calcium-activated K+ current, IK(Ca). Finally, Cl- fluxes form an important component of activated Vm fluctuations that acts to restrain excessive depolarization.