1. Effects of the cholinergic agonist, carbachol (CCh), or the acetylcholinesterase inhibitor, eserine, on presumed inhibitory hilar neurones and on inhibition in granule cells were studied by intracellular recording in guinea-pig hippocampal slices. 2. CCh (1-5 /1M) strongly enhanced the discharge activity of hilar neurones and spontaneous and evoked IPSPs in granule cells. 3. Eserine, in an atropine-sensitive manner, increased the excitability of hilar neurones through effects on membrane properties and on excitatory synaptic barrage. EPSPs readily triggered long-duration burst discharges. In granule cells, the amplitudes of evoked GABAA and GABAB receptor-mediated IPSPs were enhanced. 4. In the presence of eserine and antagonists for glutamatergic and GABAergic synaptic transmission, train stimulation evoked atropine-sensitive slow EPSPs. In contrast to those in granule cells, slow EPSPs in hilar neurones were invariably preceded by a strong burst-after-hyperpolarization. 5. We suggest that acetylcholine, released from septo-hippocampal fibres, amplifies fast synaptic excitation of inhibitory hilar neurones and inhibition of granule cells. In the dentate area, muscarinic receptor-mediated effects are faster than anticipated from the time course of the slow EPSP.