We studied the cholinergic modulation of glutamatergic transmission between neighboring layer 5 regular-spiking pyramidal neurons in somatosensory cortical slices from young rats (P10-P26). Brief bath application of 5-10 µM carbachol, a nonspecific cholinergic agonist, decreased the amplitude of evoked unitary excitatory postsynaptic potentials (EPSPs). This effect was blocked by 1 µM atropine, a muscarinic receptor antagonist. Nicotine (10 µM), in contrast to carbachol, reduced EPSPs in nominally magnesium-free solution but not in the presence of 1 mM Mg⁺², indicating the involvement of NMDA receptors. Likewise, when the postsynaptic cell was depolarized under voltage clamp to allow NMDA receptor activation in the presence of 1 mM Mg⁺², synaptic currents were reduced by nicotine. Nicotinic EPSP reduction was prevented by the NMDA receptor antagonist D-AP5 (50 µM ) and by the nicotinic receptor antagonist mecamylamine (10 µM). Both carbachol and nicotine reduced short-term depression of EPSPs evoked by 10 Hz stimulation, indicating that EPSP reduction happens via reduction of presynaptic glutamate release. In the case of nicotine, several possible mechanisms for NMDAR-dependent EPSP reduction are discussed. As a result of NMDA receptor dependence, nicotinic EPSP reduction may serve to reduce the local spread of cortical excitation during heightened sensory activity.