Cholinergic neurons in the medial septum/diagonal band complex project to the hippocampus and fascia dentata and establish characteristic types of synapses on a variety of target neurons. At present we do not know the principles that underlie the development of this projection and the formation of the cholinergic synapses. Here we have used co-cultured slices of septum and hippocampus of one- to six-day-old rat pups to study the development of the septohippocampal pathway and the formation of cholinergic synapses on hippocampal target neurons in vitro. Slices of septum and hippocampus were incubated together for 10-46 days applying the roller-tube technique. The fluorescent dye dioctadecyltetramethylindocarbocyanine perchlorate and histochemical staining for acetylcholinesterase labeled many fibers connecting both explants. Combined light- and electron-microscopic immunocytochemistry for choline acetyltransferase, the acetylcholine-synthesizing enzyme, revealed multipolar immunopositive neurons with long aspiny dendrites in the septal culture. Numerous varicose immunoreactive, supposedly cholinergic fibers could be followed from the septal to the hippocampal culture where they ramified and formed a three-dimensional network. As in situ, cholinergic terminals formed characteristic symmetric synapses on cell bodies, spines and, most often, on dendritic shafts of the hippocampal target neurons. No immunoreactive fibers and synapses were observed in single cultures of hippocampus. These results demonstrate that the cholinergic septohippocampal projection develops in vitro and that similar types of cholinergic synapses are established on co-cultured hippocampal target neurons as observed in situ.