Oral administration of ethanol (20% v/v) to male Sprague-Dawley rats for different periods of time up to 28 weeks resulted in profound reductions of acetylcholine content, in vitro synthesis and release of acetylcholine, choline uptake, activities of choline acetyltransferase, acetylcholinesterase and pyruvate decarboxylase, content of noradrenaline, serotonin and, to a lesser extent, dopamine throughout the brain. Changes were fully and partially reversible by a 4 weeks' ethanol-free period following a treatment of 8 and 18 weeks, respectively. They remained persistent, however, after 28 weeks of treatment. Performance in an eight arm-radial maze revealed a severe impairment in both spatial and non-spatial reference and working memory. A similar pattern of memory impairment was obtained after ibotenate lesion of the cholinergic basal forebrain projection system. In order to test whether this memory impairment depends on cholinergic deafferentation of the cortex, cholinergic-rich fetal basal forebrain cell suspensions were transplanted into cortex, hippocampus or both these sites in ethanol treated rats. Cholinergic-rich transplants, but not cholinergic-poor transplants, were effective in ameliorating impaired memory function and measures of cholinergic activity in the basal forebrain projection system. The behavioural efficacy of the basal forebrain grafts was well correlated with measures of both transplant volume and the degree to which they restored acetylcholine content at the transplant site; these transplants had no effect, however, on brain monoamine levels. The effects of the cholinergic-rich transplants into cortical and hippocampal sites were additive in their amelioration of performance in the radial maze. Similarly, ibotenate lesions of the sites of origin of the cholinergic projections to neocortex (in the region of the nucleus basalis magnocellularis) and hippocampus (the medial septal areas and nucleus of the diagonal band), respectively, were additive in their deleterious effects on maze performance. There were no qualitative differences in the susceptibility of the four different types of memory performance measured (spatial and non-spatial reference and working memory) to the effects of ethanol, ibotenate lesions of the cholinergic projection system, or cholinergic-rich brain tissue transplants. Thus, overall, the results indicate that the forebrain cholinergic system acts as a whole, without major functional differences between the projections originating in the medial septal area/diagonal band complex and the basal nucleus, and that it discharges a very general function in cognitive processes. It is suggested that chronic ethanol treatment in rat, known to induce similar changes in Man, might represent a model suitable to investigate the relationship of chronically induced degeneration in the cholinergic basal forebrain projection system and impaired cognitive function.