Whereas the entorhinal cortex (EC) receives profuse cholinergic innervations from the basal forebrain and activation of cholinergic receptors has been shown to modulate the activities of the principal neurons and promote the intrinsic oscillations in the EC, the effects of cholinergic receptor activation on GABAergic transmission in this brain region have not been determined. We examined the effects of muscarinic receptor activation on GABAA receptor-mediated synaptic transmission in the superficial layers of the EC. Application of muscarine dose-dependently increased the frequency and amplitude of spontaneous inhibitory postsynaptic currents (IPSCs) recorded from the principal neurons in layer II/III via activation of M 3 muscarinic receptors. Muscarine slightly reduced the frequency but had no effects on the amplitude of miniature IPSCs recorded in the presence of tetrodotoxin. Muscarine reduced the amplitude of IPSCs evoked by extracellular field stimulation and by depolarization of GABAergic interneurons in synaptically connected interneuron and pyramidal neuron pairs. Application of muscarine generated membrane depolarization and increased action potential firing frequency but reduced the amplitude of action potentials in GABAergic interneurons. Muscarine-induced depolarization of GABAergic interneurons was mediated by inhibition of background K+ channels and independent of phospholipase C, intracellular Ca2+ release, and protein kinase C. Our results demonstrate that activation of muscarinic receptors exerts diverse effects on GABAergic transmission in the EC.