Septal gamma-aminobutyric acid (GABA) receptor activation is known to disrupt memory formation, although the mechanisms underlying this impairment remain unclear. The present study explored the possibility that high levels of septal GABA receptor activity might impair memory by down-regulating acetylcholine (ACh) function in archicortex and entorhinal cortex. To test this possibility, rats were trained on an avoidance task 15 min after receiving intra-septal infusions of vehicle or muscimol (5 nmol/0.5 microl) combined with unilateral intra-hippocampal (10 microl/1 microl) or intra-entorhinal cortex (1.875 microg/0.25 microl) infusions of vehicle or the acetylcholinesterase inhibitor physostigmine. We demonstrate that these infusions do not alter acquisition performance on a continuous multiple trial inhibitory avoidance task. However, intra-septal infusions of muscimol dramatically impair retention performance 48 h later. More importantly, infusions of physostigmine into the hippocampus or the entorhinal cortex, at doses that do not influence acquisition or retention performance when infused alone, attenuate the impairing effects of the muscimol infusions on retention. We suggest that high levels of septal GABA receptor activity might impair memory by down-regulating ACh levels in the hippocampal region, and that such memory impairments can be ameliorated by increasing ACh levels in the hippocampus or entorhinal cortex.