Presynaptic nicotinic ACh receptors (nAChRs) are abundant in the nervous system, where they are thought to regulate the release of various neurotransmitters. Whole-cell recordings performed on rat interpeduncular nucleus neurons using the thin-slice technique showed that nicotine dramatically increased the frequency of postsynaptic GABAergic currents. This effect was observed at low micromolar concentration of agonist; it was mimicked by cytisine, dimethylphenylpiperazinium, and ACh in the presence of eserine. It was blocked by hexamethonium, dihydro-beta-erythroidine, and mecamylamine. The presynaptic action was suppressed in the presence of TTX. A comparable effect of nicotine was found using a preparation of acutely isolated neurons that had retained synaptic terminals attached to their cell body as evidenced by immunoreactivity to synaptophysin and presence of spontaneous GABAergic and glutamatergic synaptic activity. Nicotinic agonists increased the frequency of GABAergic postsynaptic currents, an effect blocked by curare and mecamylamine. This action was also suppressed in the presence of TTX. These data suggest the presence of nAChRs at a preterminal level on axons of intrinsic GABAergic neurons. We propose that, in contrast to presynaptic nAChRs, activation of these “preterminal” nAChRs can trigger a spike discharge and thus have a generalized action on the GABAergic afferent.