Phosphorylation of brain Na+ channels by protein kinase C (PKC) decreases peak Na+ current and slows macroscopic inactivation, but receptor-activated modulation of Na+ currents via the PKC pathway has not been demonstrated. We have examined modulation of Na+ channels by activation of muscarinic receptors in acutely-isolated hippocampal neurons using whole-cell voltage-clamp recording. Application of the muscarinic agonist carbachol reduced peak Na+ current and slowed macroscopic inactivation at all potentials, without changing the voltage-dependent properties of the channel. These effects were mediated by PKC, since they were eliminated when the specific PKC inhibitor (PKCI19-36) was included in the pipette solution and mimicked by the extracellular application of the PKC activator, OAG. Thus, activation of endogenous muscarinic receptors on hippocampal neurons strongly modulates Na+ channel activity by activation of PKC. Cholinergic input from basal forebrain neurons may have this effect in the hippocampus in vivo.