Simultaneous whole cell recordings from monosynaptically connected cortical cells were performed with the use of two patch pipettes to determine the effect of acetylcholine (ACh) on both excitatory and inhibitory postsynaptic potentials (EPSPs and IPSPs, respectively) in cultured neurons from rat visual cortex. For 96% of EPSPs and 73% of IPSPs, ACh potently suppressed postsynaptic potentials in a dose-dependent manner. The estimated effective concentrations to produce half maximal response (EC50S) were 30 and 210 nM for EPSPs and IPSPs, respectively. To identify what subtypes of ACh receptors are involved in the suppression of postsynaptic potentials, three different, partially selective muscarinic receptor antagonists were used. According to the comparison of estimated Schild coefficients for each of the three antagonists against the suppression by ACh, EPSPs are most likely mediated by m4 receptors, and IPSPs by m1 receptors. When cells were treated with pertussis toxin, which inactivates m2 and m4 receptors while leaving m1, m3, and m5 receptors intact, 7 of 8 EPSPs were resistant to ACh whereas 8 of 12 IPSPs were still suppressed by ACh. This result supports the interpretation that the suppression of EPSPs was mediated by m4 receptors and that of IPSPs by m1 receptors. To obtain an indication as to whether ACh works presynaptically or postsynaptically, 1/CV2 analysis was carried out. The resultant diagonal alignment of the ratio of 1/CV2 plotted against the ratio of the amplitude of postsynaptic potentials suggests a presynaptic mechanism for the suppression of both EPSPs and IPSPs. In addition, in many cases a large synaptic suppression was observed without an obvious change in the input resistance. Furthermore, in one case where a single inhibitory driver cell was recorded with three different follower cells sequentially, none of the three IPSPs was suppressed by ACh, providing additional support for the presynaptic localization of ACh action. These results suggest that in cerebral cortex ACh has, in addition to its direct facilitatory effect via m3 pharmacology, a suppressive effect on EPSPs and IPSPs via m1 and m4 muscarinic receptors, respectively, probably with a presynaptic site of action. Separation of the actions of ACh into different receptor-second messenger pathways with potential for independent interactions with other neuromodulatory systems may be an important aspect of the mechanism of cholinergic regulation of functional state in cortex. Separation of cholinergic effects at different receptors might also offer a means for selective pharmacological intervention in disorders of sleep or memory.