Cortical networks undergo large-scale switching between states of increased or decreased activity in normal sleep and cognition as well as in pathological conditions such as epilepsy. We previously found that focal hippocampal seizures in rats induce increased neuronal firing and cerebral blood flow in subcortical structures including the lateral septal area, along with frontal cortical slow oscillations resembling slow wave sleep. In addition, stimulation of the lateral septum in the absence of a seizure resulted in cortical deactivation with slow oscillations. We hypothesized that lateral septal activation might cause neocortical deactivation indirectly, possibly through impaired subcortical arousal. But how does subcortical stimulation cause slow wave activity in frontal cortex? How do arousal neurotransmitter levels (e.g. acetylcholine) change in cortex during the excitation of inhibitory projection nuclei? In the current study, we used simultaneous electrophysiology and enzyme-based amperometry in a rat model, and found a decrease in choline, along with slow wave activity in orbital frontal cortex during lateral septal stimulation in the absence of seizures. In contrast, the choline signal and local field potential in frontal cortex had no significant changes when stimulating the hippocampus, but showed increased choline and decreased slow wave activity with an arousal stimulus produced by toe pinch. These findings indicate that the activation of subcortical inhibitory structures (such as lateral septum) can depress subcortical cholinergic arousal. This mechanism may play an important role in large-scale transitions of cortical activity in focal seizures, as well as in normal cortical function.