The dopaminergic projections to the basal ganglia have long been implicated in reward-guided behavior and decision-making, yet little is known about the role of the posterior pedunculopontine nucleus (pPPN), a major source of excitatory input to the mesolimbic dopamine system. Here we studied the contributions of the pPPN to decision-making under risk, using excitoxic lesions and reversible inactivation in rats. Rats could choose between two options – a small but certain reward on one lever; or a large but uncertain reward on the other lever. The overall payoff associated with each choice is the same, but the reward variance (risk) associated with the risky choice is much higher. In Experiment 1, we showed that excitotoxic lesions of the pPPN before training did not affect acquisition of lever pressing. But whereas the controls strongly preferred the safe choice, the lesioned rats did not. In Experiment 2, we found that muscimol inactivation of the pPPN also produced similar effects, but reversibly. These results show that permanent lesions or reversible inactivation of the pPPN both abolish risk aversion in decision-making.