Rats were trained for several months to perform a radial arm maze task and then given either sham or ibotenic acid lesions of the nucleus basalis magnocellularis (NBM), the primary cholinergic projection to the neocortex. The lesion produced a profound and apparently selective disturbance in memory for recent events. Further testing revealed that although the memory deficit persisted for several weeks, a gradual but complete recovery eventually occurred. Moreover, when these functionally recovered rats were later tested on a passive avoidance task that is normally sensitive to lesions of the NBM, no deficit was found. Thus, the post-lesion recovery of function generalized to a different memory test, upon which no post-lesion practice had been given. Post-mortem determinations revealed that the lesions caused marked neurodegeneration of the NBM, and decreases in both cortical choline acetyltransferase activity and high affinity choline uptake, but had no effect on density of muscarinic receptors. No evidence of neuronal recovery or neurochemical compensatory changes in the cholinergic system was found in the cortical projection areas, lesion site, or in parallel cholinergic systems terminating in the hippocampus or olfactory bulb. These results support the idea that the cortically-projecting cholinergic cells of the NBM normally play an important role in mediating recent memory. However, they also demonstrate that any simple relationship between the function of this brain region and the mediation of recent memory is unlikely. Finally, the results of this study direct attention toward issues related to the mechanisms involved with the recovery of function, and the extent to which degeneration of this brain area may contribute directly to the severe disturbance of cognitive function associated with certain neurodegenerative diseases (e.g., Alzheimer's, Pick's and Parkinson's disease).