The cholinergic system in the CNS plays important roles in higher brain functions, primarily through muscarinic acetylcholine receptors. At cellular levels, muscarinic activation produces various effects including modulation of synaptic transmission. Here we report that muscarinic activation suppresses hippocampal inhibitory transmission through two distinct mechanisms, namely a cannabinoid-dependent and cannabinoid-independent mechanism. We made paired whole-cell recordings from cultured hippocampal neurons of rats and mice, and monitored inhibitory postsynaptic currents (IPSCs). When cannabinoid receptor type 1 (CB1) was blocked, oxotremorine M (oxo-M), a muscarinic agonist, suppressed IPSCs in a subset of neuron pairs. This suppression was associated with an increase in paired-pulse ratio, blocked by the M2-prefering antagonist gallamine, and was totally absent in neuron pairs from M2-knockout mice. When CB1 receptors were not blocked, oxo-M suppressed IPSCs in a gallamine-resistant manner in cannabinoid-sensitive pairs. This suppression was associated with an increase in paired-pulse ratio, blocked by the CB1 antagonist AM281, and was completely eliminated in neuron pairs from M1/M3-compound-knockout mice. Our immunohistochemical examination showed that M2 and CB1 receptors were present at inhibitory presynaptic terminals of mostly different origins. These results indicate that two distinct mechanisms mediate the muscarinic suppression. In a subset of synapses, activation of M2 receptors at presynaptic terminals suppresses GABA release directly. In contrast, in a different subset of synapses, activation of M1/M3 receptors causes endocannabinoid production and subsequent suppression of GABA release by activating presynaptic CB1 receptors. Thus, the muscarinic system can influence hippocampal functions by controlling different subsets of inhibitory synapses through the two distinct mechanisms.