The inferior colliculus (IC), the midbrain hub of the central auditory system, receives extensive cholinergic input from the pontomesencephalic tegmentum. Activation of nicotinic acetylcholine receptors (nAChRs) in the IC can alter acoustic processing and enhance auditory task performance. However, how nAChRs affect the excitability of specific classes of IC neurons remains unknown. Recently, we identified vasoactive intestinal peptide (VIP) neurons as a distinct class of glutamatergic principal neurons in the IC. Here, in experiments using male and female mice, we show that cholinergic terminals are routinely located adjacent to the somas and dendrites of VIP neurons. Using whole-cell electrophysiology in brain slices, we found that acetylcholine drives surprisingly strong and long-lasting excitation and inward currents in VIP neurons. This excitation was unaffected by the muscarinic receptor antagonist atropine. Application of nAChR antagonists revealed that acetylcholine excites VIP neurons mainly via activation of α3β4∗ nAChRs, a nAChR subtype that is rare in the brain. Furthermore, we show that acetylcholine excites VIP neurons directly and does not require intermediate activation of presynaptic inputs that might express nAChRs. Lastly, we found that low frequency trains of acetylcholine puffs elicited temporal summation in VIP neurons, suggesting that in vivo-like patterns of cholinergic input can reshape activity for prolonged periods. These results reveal the first cellular mechanisms of nAChR regulation in the IC, identify a functional role for α3β4∗ nAChRs in the auditory system, and suggest that cholinergic input can potently influence auditory processing by increasing excitability in VIP neurons and their postsynaptic targets.