Nicotinic acetylcholine receptors (nAChRs) are widely expressed throughout the central nervous system and participate in a variety of physiological functions. Recent advances have revealed roles of nAChRs in the regulation of synaptic transmission and synaptic plasticity, particularly in the hippocampus and midbrain dopamine centers. In general, activation of nAChRs causes membrane depolarization and directly and indirectly increases the intracellular calcium concentration. Thus, when nAChRs are expressed on presynaptic membranes their activation generally increases the probability of neurotransmitter release. When expressed on postsynaptic membranes, nAChR-initiated calcium signals and depolarization activate intracellular signaling mechanisms and gene transcription. Together, the presynaptic and postsynaptic effects of nAChRs generate and facilitate the induction of long-term changes in synaptic transmission. The direction of hippocampal nAChR-mediated synaptic plasticity - either potentiation or depression - depends on the timing of nAChR activation relative to coincident presynaptic and postsynaptic electrical activity, and also depends on the location of cholinergic stimulation within the local network. Therapeutic activation of nAChRs may prove efficacious in the treatment of neuropathologies where synaptic transmission is compromised, as in Alzheimer's or Parkinson's disease.