A large variety of distinct locally connected GABAergic cells are present in the hippocampus. By releasing GABA into principal cells and interneurons, they exert a powerful control on neuronal excitability and are responsible for network oscillations crucial for information processing in the brain. Here, whole-cell patch clamp recordings in current and voltage clamp mode were used to study the functional role of nicotinic acetylcholine receptors (nAChRs) on the firing properties of stratum oriens interneurons in hippocampal slices from transgenic mice expressing enhanced green fluorescent protein in a subpopulation of GABAergic cells containing somatostatin (GIN mice). Unexpectedly, activation of nAChRs by nicotine or endogenously released acetylcholine strongly enhanced spike frequency adaptation. This effect was blocked by apamin, suggesting the involvement of small calcium-dependent potassium channels (SK channels). Nicotine-induced reduction in firing frequency was dependent on intracellular calcium rise through calcium-permeable nAChRs and voltage-dependent calcium channels activated by the depolarizing action of nicotine. Calcium imaging experiments directly showed that nicotine effects on firing rate were correlated with large increases in intracellular calcium. Furthermore, blocking ryanodine receptors with ryanodine or sarcoplasmic–endoplasmic reticulum calcium ATPase with thapsygargin or cyclopiazonic acid fully prevented the effects of nicotine, suggesting that mobilization of calcium from the internal stores contributed to the observed effects. By regulating cell firing, cholinergic signalling through nAChRs would be instrumental for fine-tuning the output of stratum oriens interneurons and correlated activity at the network level.