Neurons of the neostriatum are richly innervated by cholinergic neurons of intrinsic origin. Both pre- and post-synaptic muscarinic receptors mediate the effects of acetylcholine (ACh). Activation of these receptors is functionally significant, particularly in Parkinson's disease. Current-clamp studies indicate that muscarinic receptors serve to decrease the responsiveness of neostriatal neurons to excitatory inputs. Here we present evidence that this effect is caused, in part, by the muscarinic modulation of the A-current, a transient outward potassium current. The voltage dependence of this current suggests that normally it enhances spike repolarization and slows discharge rate, but does not affect 'synaptic integration'. We find that under the influence of muscarinic agonists, the voltage dependence of A-current activation and inactivation is shifted towards more negative membrane potentials and the peak conductance is increased. Therefore, at relatively hyperpolarized resting potentials, ACh transiently alters the functional role of the A-current, allowing it to suppress excitatory inputs and further slow the discharge rate. But at relatively depolarized resting potentials, ACh increases excitability by removing the A-current through inactivation.