Two fundamental issues in auditory cortical processing are the relative importance of thalamocortical versus intracortical circuits in shaping response properties in primary auditory cortex (ACx), and how the effects of neuromodulators on these circuits affect dynamic changes in network and receptive field properties that enhance signal processing and adaptive behavior. To investigate these issues, we developed a computational model of layers III and IV (LIII/IV) of AI, constrained by anatomical and physiological data. We focus on how the local and global cortical architecture shape receptive fields (RFs) of cortical cells and on how different well-established cholinergic effects on the cortical network reshape frequency-tuning properties of cells in ACx. We identify key thalamocortical and intracortical circuits that strongly affect tuning curves of model cortical neurons and are also sensitive to cholinergic modulation. We then study how differential cholinergic modulation of network parameters change the tuning properties of our model cells and propose two different mechanisms: one intracortical (involving muscarinic receptors) and one thalamocortical (involving nicotinic receptors), which may be involved in rapid plasticity in ACx, as recently reported in a study by Fritz and coworkers.