Neural grafts rich in cholinergic neurones can survive transplantation to the neocortex or hippocampus in rats. Such grafts have the capacity to ameliorate a variety of functional deficits associated both with explicit lesions that deafferent the neocortex or hippocampus and with natural ageing. The transplantation technique enhances our understanding of the involvement of forebrain cholinergic systems in normal cognitive functions (including memory) and of the role of cholinergic degeneration in the dysfunctions associated with ageing. It is unlikely, however, that these observations will extend to a therapeutic strategy for dementia using neural transplantation, because the human diseases (at least in the case of Alzheimer's disease and multi-infarct dementia) involve widespread degeneration of other populations of cortical neurones that are not so amenable to functional transplantation as the diffuse forebrain cholinergic systems.