Analysis of the cholinergic regulation of glutamatergic neurotransmission is an essential step in understanding the hippocampus because it can influence forms of synaptic plasticity that are thought to underlie learning and memory. We studied in vitro the cholinergic regulation of excitatory postsynaptic currents (EPSCs) evoked in rat CA1 pyramidal neurons by Schaffer collateral (SC) stimulation. Using ‘minimal’ stimulation, which activates one or very few synapses, the cholinergic agonist carbamylcholine (CCh) increased the failure rate of functional more (36 %) than of silent synapses (7 %), without changes in the EPSC amplitude. These effects of CCh were insensitive to manipulations that increased the probability of release, such as paired pulse facilitation, increases in temperature and increases in the extracellular Ca2+ : Mg2+ ratio. Using ‘conventional’ stimulation, which activates a large number of synapses, CCh inhibited more the pharmacologically isolated non‐NMDA (86 %) than the NMDA (47 %) EPSC. The changes in failure rate, EPSC variance and the increased paired pulse facilitation that paralleled the inhibition imply that CCh decreased release probability. Muscarine had similar effects. The inhibition by both CCh and by muscarine was prevented by atropine. We conclude that CCh reduces the non‐NMDA component of SC EPSCs by selectively inhibiting transmitter release at functional synapses via activation of muscarinic receptors. The results suggest that SCs have two types of terminals, one in functional synapses, selectively sensitive to regulation through activation of muscarinic receptors, and the other in silent synapses less sensitive to that regulation. The specific inhibition of functional synapses would favour activity‐dependent plastic phenomena through NMDA receptors at silent synapses without the activation of non‐NMDA receptors and functional synapses.