We hypothesize that endogenous cholinergic modulation of dendritic processing of hippocampal CA1 is layer specific, and it specifically enhances spike output resulting from basal as compared with the apical dendritic excitation. Laminar profiles of evoked field potentials were recorded in the CA1 area of urethane-anesthetized rats using multichannel silicon probes and analyzed as current source density. High-frequency stimulation of the pontis oralis (PnO) attenuated the midapical more than the basal or distal apical dendritic excitatory sink. Population spike (PS) and excitatory sink-PS potentiation resulting from basal dendritic excitation were facilitated, while the PS evoked by apical dendritic stimulation was attenuated by PnO stimulation. Perfusion of cholinergic agonist carbachol onto hippocampal slices in vitro also attenuated the apical more than the basal dendritic excitatory postsynaptic potentials. Excitatory sink attenuation and PS changes after PnO stimulation were blocked by systemic or local scopolamine and by intracerebroventricular (icv) M1 receptor antagonist pirenzepine but not by icv M2 receptor antagonist AFDX-116 or nicotinic antagonists. However, a hippocampal theta rhythm activated by PnO stimulation was blocked by systemic but not by local scopolamine. We conclude that endogenous acetylcholine mediates a stronger presynaptic inhibition of the midapical than basal and distal apical excitation mainly through M1 receptors.