This study aimed to examine the role of the nicotinic receptor (nAChR) in the generation of theta oscillations (4-12 Hz) in vitro. Electrophysiological studies were performed on medial septal diagonal band area (MSDB) slices to measure theta oscillation. Immunofluorescence and confocal microscopy studies were carried out to detect α4 nAChR and β2 nAChR subunits in perfused-fixed tissue from VGluT2-GFP and GAD67-GFP transgenic mice. Application of nicotine to MSDB slices produced persistent theta oscillations in which area power increased in a dose-responsive manner. This activity was inhibited by GABAA receptor antagonists and partially by ionotropic glutamate receptor antagonists, indicating the involvement of local GABAergic and glutamatergic neurons in the production of the rhythmic activity. The nicotine-induced theta activity was also inhibited selectively by non-α7*nAChR antagonists, suggesting the presence of these receptor types on GABAergic and glutamatergic neuron populations in the MSDB. This was confirmed by immunofluorescence and confocal microscopy studies in transgenic mice in which the GABAergic and glutamatergic neurons express green fluorescent protein (GFP), showing localisation of β2 nAChR and α4 nAChR subunits, the most common constituents of non-α7*nAChRs, in both cell types in the MSDB. Theta activity in the MSDB may be generated by tonic stimulation of non-α7*nAChRs.