Neurons of the medial septum/diagonal band of Broca (MSDB) project to the hippocampus. Muscarinic cholinergic mechanisms within the MSDB are potent modulators of hippocampal functions; intraseptal scopolamine disrupts and intraseptal carbachol facilitates hippocampus-dependent learning and memory tasks, and the associated hippocampal theta rhythm. In earlier work, we demonstrated that, within the MSDB, the septohippocampal GABAergic but not cholinergic neurons are the primary target of muscarinic manipulations and that muscarinic activation of septohippocampal GABAergic neurons is mediated directly via M3 receptors. In the present study, we examined the ionic mechanism(s) underlying the excitatory actions of muscarine in these neurons. Using whole-cell patch-clamp recording techniques in rat brain slices, we demonstrated that M3 receptor-mediated muscarinic activation of MSDB neurons is dependent on external Na+ and is also reduced by bath-applied Ni2+ and KB-R7943 as well as by replacing external Na+ with Li+, suggesting a primary involvement of the Na+–Ca2+ exchanger. We conclude that the M3 receptor-mediated muscarinic activation of MSDB septohippocampal GABA-type neurons, that is important for cognitive functioning, is mediated via activation of the Na+–Ca2+ exchanger.