Depression, a pervasive and disabling mental health disorder, presents a global healthcare challenge. Despite persistent research on its etiology and pathophysiology, many aspects remain unclear. Predominant neurobiological research and traditional pharmacotherapies have pointed out the monoamine hypothesis as a pivotal factor in the pathophysiology of depression. However, emerging perspectives on the monoamine hypothesis highlight the significance of the cholinergic system, a major regulator of diverse CNS functions encompassing attention, arousal, cognition, and memory. Cognitive impairments were frequently observed in depression along with other symptoms i.e. low mood and anhedonia. A comprehensive literature search was conducted across multiple databases (PubMed, Scopus, and Web of Science) from their inception until May 2023. We screened 1,200 articles, of which 400 full-text articles were assessed for eligibility, and 231 studies met the inclusion criteria. The review included both pre-clinical and clinical studies focusing on the role of acetylcholine (ACh) and its receptors in depression. Data extraction and quality assessment were performed independently by two reviewers. In literature, both pre-clinical and clinical studies suggest that elevated central ACh levels may contribute to depression, prompting investigations into intervention strategies targeting mAChRs/nAChRs and AChE. These receptors have become a critical target in drug-design strategies aimed at addressing depression-like symptoms. In addition, research has demonstrated a significant antidepressant-like effect of AChEIs in a dose-dependent manner in animal models. Hence, this evidence over the past decades underscores the pivotal role of the cholinergic system in mood regulation, offering promise for novel depression treatments. In this review, we tried to summarize the historical evolution of the cholinergic system from early discoveries to its role in the pathophysiology of depression. It presents evidence for the involvement of mAChRs and nAChRs, as well as AChE, in depression. By outlining the cholinergic theory of depression, this review suggests a novel therapeutic approach, emphasizing the role of ACh in the complex depression pathophysiology, and presenting avenues for further research and the development of targeted interventions.