The cholinergic system is critically involved in synaptic models of learning and memory by enhancing dendritic [Ca2+](i) signals. Diffuse cholinergic innervation suggests subcellular modulation of membrane currents and Ca2+ signals. Here we use ion-selective microelectrodes to study spread of carbachol (CCh) after focal application into brain slice and subcellular muscarinic modulation of synaptic responses in CAI pyramidal neurons. Proximal application of CCh rapidly blocked the somatic slow afterhyperpolarization (sAHP) following repetitive stimulation. In contrast, the time course of potentiation of the slow tetanic depolarization (STD) during synaptic input was slower and followed the time course of spread of CCh to the dendritic tree. With distal application, augmentation of the somatic STD and of dendritic Ca2+ responses followed spread of CCh to the entire apical dendritic tree, whereas the sAHP was blocked only after spread of CCh to the proximal dendritic segment. In dendritic recordings, CCh blocked a small sAHP, augmented the STD, and rather reduced dendritic action potentials. Augmentation of dendritic Ca2+ signals was highly correlated to augmentation of the STD. The NMDA receptor antagonist DL-2-amino-5-phosphonovaleric acid (APV) blocked similar to 55% of the STD in control and during CCh application. In conclusion, muscarinic suppression of the proximal sAHP can augment firing and thereby Ca2+ responses. Dendritic augmentation of the STD by blockade of the sAHP and direct enhancement of N-methyl-D-aspartate (NMDA) receptor-mediated currents potentiates Ca2+ signals even when firing is not affected due to suprathreshold input. In this way, subcellular muscarinic modulation may contribute to parallel information processing and storage by dendritic synapses of CA1 pyramidal neurons.