The nicotinic cholinergic antagonist alpha-bungarotoxin (alpha-BT) binds throughout the rat hippocampal formation. The binding is displaceable by d-tubocurarine. The most heavily labeled cells are GABA- containing interneurons in the dentate and in Ammon's horn. These neurons have several different morphologies and contain several neuropeptides. alpha-BT-labeled interneurons in the dentate are small cells between the granular and molecular layers that often contain neuropeptide Y. alpha-BT-labeled interneurons in CA1 are medium-sized interneurons, occasionally found in stratum pyramidale, but more often found in stratum radiatum and stratum lacunosum moleculare. These neurons often contain cholecystokinin. The largest alpha-BT-labeled interneurons are found in CA3, in both stratum radiatum and stratum lucidum. These neurons are multipolar and frequently are autofluorescent. They often contain somatostatin or cholecystokinin. These large interneurons have been found to receive medial septal innervation and may also have projections that provide inhibitory feedback directly to the medial septal nucleus. The cholinergic innervation of the hippocampus from the medial septal nucleus is under the trophic regulation of NGF and brain-derived neurotrophic factor, even in adult life. Expression of mRNA for both these factors is increased in CA3 and the dentate after intraventricular administration of alpha-BT, but not after administration of the muscarinic antagonist atropine. alpha-BT-sensitive cholinergic receptors on inhibitory interneurons may be critical to medial septal regulation of the hippocampal activity, including the habituation of response to sensory input.