Acetylcholine release in the central nervous system (CNS) has an important role in attention, recall and memory formation. One region influenced by acetylcholine is the hippocampus, which receives inputs from the medial septum and diagonal band of Broca complex (MS/DBB). Release of acetylcholine from the MS/DBB can directly affect several elements of the hippocampus including glutamatergic and GABAergic neurons, presynaptic terminals, postsynaptic receptors and astrocytes. A significant portion of acetylcholine’s effect likely results from the modulation of GABAergic inhibitory interneurons, which have crucial roles in controlling excitatory inputs, synaptic integration, rhythmic coordination of principal neurons and outputs in the hippocampus. Acetylcholine affects interneuron function in large part by altering their membrane potential via muscarinic and nicotinic receptor activation. This minireview describes recent data from mouse hippocampus that investigated changes in CA1 interneuron membrane potentials following acetylcholine release. The interneuron subtypes affected, the receptor subtypes activated, and the potential outcome on hippocampal CA1 network function is discussed.