Primary fibroblasts modified to secrete nerve growth factor (NGF) were implanted into the nucleus basalis magnocellularis (NBM) of aged memory impaired rats. The NGF-producing fibroblasts survived for 6 weeks following transplantation and continued expressing NGF mRNA through the duration of the experiment. A significant amelioration of the memory impairment and a significant increase in size and number of low- affinity NGF receptor (p75)-positive neurons in the basal forebrain were observed. Implantation of NGF-producing cells into normal young adult rats resulted in a transient but significant memory impairment and hypertrophy of low-affinity NGF receptor-positive neurons. These results show that naturally occurring age-related memory loss can be reversed by grafting cells engineered to secrete NGF directly to the NBM, and that either cholinergic hyper- or hypofunction may lead to cognitive impairments.