Switching behaviors from aggression to submission in losers at the end of conspecific social fighting is essential to avoid serious injury or death. We have previously shown that the experience of defeat induces a loser-specific potentiation in the habenula (Hb)-interpeduncular nucleus (IPN) and show here that this is induced by acetylcholine. Calcium imaging and electrophysiological recording using acute brain slices from winners and losers of fighting behavior in zebrafish revealed that the ventral IPN (vIPN) dominates over the dorsal IPN in the neural response to Hb stimulation in losers. We also show that GluA1 α-amino-3-hydroxy-5-methyl-4-isoxazolepropionic acid (AMPA) receptor subunits on the postsynaptic membrane increased in the vIPN of losers. Furthermore, these loser-specific neural properties disappeared in the presence of an α7 nicotinic acetylcholine receptor (nAChR) antagonist and, conversely, were induced in brain slices of winners treated with α7 nAChR agonists. These data suggest that acetylcholine released from Hb terminals in the vIPN induces activation of α7 nAChR followed by an increase in postsynaptic membrane GluA1. This results in an increase in active synapses on postsynaptic neurons, resulting in the potentiation of neurotransmissions to the vIPN. This acetylcholine-induced neuromodulation could be the neural foundation for behavioral switching in losers. Our results could increase our understanding of the mechanisms of various mood disorders such as social anxiety disorder and social withdrawal.