Neocortical cholinergic activity plays a fundamental role in sensory processing and cognitive functions, but the underlying cellular mechanisms are largely unknown. We analyzed the effects of acetylcholine (ACh) on synaptic transmission and cell excitability in rat "barrel cortex" layer V (L5) pyramidal neurons in vitro. ACh through nicotinic and M1 muscarinic receptors enhanced excitatory postsynaptic currents and through nicotinic and M2 muscarinic receptors reduced inhibitory postsynaptic currents. These effects increased excitability and contributed to the generation of Ca(2+) spikes and bursts of action potentials (APs) when inputs in basal dendrites were stimulated. Ca(2+) spikes were mediated by activation of NMDA receptors (NMDARs) and L-type voltage-gated Ca(2+) channels. Additionally, we demonstrate in vivo that basal forebrain stimulation induced an atropine-sensitive increase of L5 AP responses evoked by vibrissa deflection, an effect mainly due to the enhancement of an NMDAR component. Therefore, ACh modified the excitatory/inhibitory balance and switched L5 pyramidal neurons to a bursting mode that caused a potent and sustained response enhancement with possible fundamental consequences for the function of the barrel cortex.