Nucleus basalis (NB) neurons are a primary source of neocortical acetylcholine (ACh) and likely contribute to mechanisms of neocortical activation. However, the functions of neocortical activation and its cholinergic component remain unclear. To identify functional consequences of NB activity, we have studied the effects of NB stimulation on thalamocortical transmission. Here we report that tetanic NB stimulation facilitated field potentials, single neuron discharges, and monosynaptic excitatory postsynaptic potentials (EPSPs) elicited in middle to deep cortical layers of the rat auditory cortex following stimulation of the auditory thalamus (medial geniculate, MG). NB stimulation produced a twofold increase in the slope and amplitude of the evoked short-latency (onset 3.0 +/- 0.13 ms, peak 6.3 +/- 0.21 ms), negative-polarity cortical field potential and increased the probability and synchrony of MG-evoked unit discharge, without altering the preceding fiber volley. Intracortical application of atropine blocked the NB-mediated facilitation of field potentials, indicating action of ACh at cortical muscarinic receptors. Intracellular recordings revealed that the short-latency cortical field potential coincided with a short-latency EPSP (onset 3.3 +/- 0.20 ms, peak 5.6 +/- 0.47 ms). NB stimulation decreased the onset and peak latencies of the EPSP by about 20% and increased its amplitude by 26%. NB stimulation also produced slow membrane depolarization and sometimes reduced a long-lasting IPSP that followed the EPSP. The combined effects of NB stimulation served to increase cortical excitability and facilitate the ability of the EPSP to elicit action potentials. Taken together, these data indicate that NB cholinergic neurons can modify neocortical functions by facilitating thalamocortical synaptic transmission.