The present experiments examined whether transplanted fetal cholinergic neurons would attenuate the behavioral and neurochemical deficits induced by the cholinotoxin AF64A (ethylcholine aziridinium ion). Bilateral injections of AF64A (3 nmol) into the lateral ventricles produced significant learning and memory impairments together with decreases in hippocampal high-affinity choline uptake (HAChU). AF64A-treated rats were impaired on both a standard radial arm maze (RAM) task and a working memory version in which a one-hour delay was imposed between the fourth and fifth arm choices. Transplantation of embryonic day E-17 septal/diagonal band tissue into the hippocampus (HPC) promoted recovery of performance on the standard version of the RAM task. However, this recovery was not observed when the animals were tested on the more difficult delay version of the task. Neurochemical analysis indicated that AF64A produced a significant (31%) decrease in hippocampal HAChU that was attenuated (14%) by transplantation of fetal cholinergic neurons. Histological analysis revealed that the transplants survived and innervated the HPC. There was no apparent relationship between fiber ingrowth into the HPC and behavioral recovery. These data indicate that transplant-induced behavioral recovery may be related to and limited by the cognitive demands of the testing situation. Generalized increases in cholinergic activity, transplant-mediated release of trophic factors, or a combination of both may underlie the behavioral recovery observed in the present studies.