Cholinergic modulation of central circuits is associated with active sensation, attention, and learning, yet the neural circuits and temporal dynamics underlying cholinergic effects on sensory processing remain unclear. Understanding the effects of cholinergic modulation on particular circuits is complicated by the widespread projections of cholinergic neurons to telencephalic structures that themselves are highly interconnected. Here we examined how cholinergic projections from basal forebrain to the olfactory bulb (OB) modulate output from the first stage of sensory processing in the mouse olfactory system. By optogenetically activating their axons directly in the OB, we found that cholinergic projections from basal forebrain regulate OB output by increasing the spike output of presumptive mitral/tufted cells. Cholinergic stimulation increased mitral/tufted cell spiking in the absence of inhalation-driven sensory input and further increased spiking responses to inhalation of odorless air and to odorants. This modulation was rapid and transient, was dependent on local cholinergic signaling in the OB, and differed from modulation by optogenetic activation of cholinergic neurons in basal forebrain, which led to a mixture of mitral/tufted cell excitation and suppression. Finally, bulbar cholinergic enhancement of mitral/tufted cell odorant responses was robust and occurred independent of the strength or even polarity of the odorant-evoked response, indicating that cholinergic modulation adds an excitatory bias to mitral/tufted cells as opposed to increasing response gain or sharpening response spectra. These results are consistent with a role for the basal forebrain cholinergic system in dynamically regulating the sensitivity to or salience of odors during active sensing of the olfactory environment.