Phosphorylation of brain Na+ channels by protein kinase C (PKC) decreases peak Na+ current and slows macroscopic inactivation, but receptor-activated modulation of Na+ currents via the PKC pathway has not been demonstrated. We have examined modulation of Na+ channels by activation of muscarinic receptors in acutely-isolated hippocampal neurons using whole-cell voltage-clamp recording. Application of the muscarinic agonist carbachol reduced peak Na+ current and slowed macroscopic inactivation at all potentials, without changing the voltage-dependent properties of the channel. These effects were mediated by PKC, since they were eliminated when the specific PKC inhibitor (PKCI19–36) was included in the pipette solution and mimicked by the extracellular application of the PKC activator, OAG. Thus, activation of endogenous muscarinic receptors on hippocampal neurons strongly modulates Na+ channel activity by activation of PKC. Cholinergic input from basal forebrain neurons may have this effect in the hippocampus in vivo.