In rats, selective depletion of the cholinergic interneurons in the ventral striatum (nucleus accumbens or N.Acc.) results in heightened behavioural sensitivity to amphetamine and impaired sensorimotor gating processes, suggesting a hyper-responsiveness to dopamine (DA) activity in the N.Acc. We hypothesized that local cholinergic depletion may also trigger distal functional alterations, particularly in prefrontal cortex (PFC). Adult male Sprague-Dawley rats were injected bilaterally in the N.Acc. with an immunotoxin targeting choline acetyltransferase. Two weeks later, cognitive function was assessed using the delayed alternation paradigm in the T-maze. The rats were then implanted with voltammetric recording electrodes in the ventromedial PFC to measure in vivo extracellular DA release in response to mild tail pinch stress. The PFC was also examined for density of tyrosine hydroxylase (TH)-labelled varicosities. In another cohort of control and lesioned rats, we measured post mortem tissue content of DA.Depletion of cholinergic neurons (restricted to N.Acc.) significantly impaired delayed alternation performance across delay intervals. While (basal) post mortem indices of PFC DA function were unaffected by N.Acc. lesions, in vivo mesocortical DA activation was markedly reduced; this deficit correlated significantly with cognitive impairments. TH-labelled varicosities however, were unaffected in cortical layer V relative to controls. These data suggest that selective depletion of cholinergic interneurons in N.Acc. triggers widespread functional impairments in mesocorticolimbic DA function and cognition. The possible relevance of these findings is also discussed in relation to schizophrenia, where reduced density of cholinergic neurons in ventral striatum has been reported.