The cholinergic input to the hippocampus from the medial septum is important for modulating hippocampal activity and functions, including theta rhythm and spatial learning. Neuromodulation by transmitters in central nervous system neurons usually affects cell excitability by modifying the membrane potential, discharge pattern and spike frequency. Here we describe another type of neuromodulation: changing the action potential waveform. During intracellular recordings from CA1 pyramidal cells in hippocampal slices from rats, the cholinergic agonist carbachol caused several reversible changes in the action potential: low doses (2 microM) caused an increase in spike duration; high doses (10-40 microM) or long-lasting applications also reduced the spike amplitude and rate of rise, and raised the spike threshold. These effects are similar to those of metabotropic glutamate receptor agonists or phorbol esters, both of which activate protein kinase C. The effects were blocked by the muscarinic antagonist atropine, and were prevented by Ca(2+)-free medium and by Ca(2+)-channel blockers. However, the cholinergic spike modulation was not occluded or mimicked by blocking the Ca(2+)-dependent K+ currents IC or IAHP, suggesting that these K+ currents are not involved in the modulation. We conclude that muscarinic receptor activation modulates the action potential in CA1 pyramidal cells via a Ca(2+)-dependent mechanism, possibly involving protein kinase C. This modulation and the similar effects mediated by metabotropic glutamate receptors to our knowledge provide the only examples of neuromodulation of the action potential in the vertebrate central nervous system-a form of modulation known to regulate Ca2+ influx and transmitter release, and to mediate synaptic plasticity and learning in invertebrates.