Coding of prediction error by midbrain dopamine neurons has been examined extensively in the framework of associative learning theory. Most of this research has focused on the role of prediction error in determining the reinforcement value of unconditioned stimuli: poorly predicted ("surprising") outcomes are more effective reinforcers and produce a greater dopamine response than well predicted outcomes. However, surprise also enhances attention to cues that signal poorly predicted outcomes. Previous reports from our laboratories demonstrated that circuitry, including the amygdala central nucleus (CeA), the cholinergic neurons of the substantia innominata/ nucleus basalis region, and their innervation of the posterior parietal cortex, is critical to these surprise-induced enhancements of attention in associative learning. The present study considered the origin of prediction error information important for the operation of this system by examining the effects of disrupting communication between the midbrain substantia nigra pars compacta (SNc) and the CeA. Rats received unilateral lesions of the SNc and lesions of the CeA in either the contralateral or ipsilateral hemisphere. Contralateral lesions eliminated the surprise-induced enhancement of attention and learning that was displayed by rats with ipsilateral control lesions. These results show that SNc-CeA communication is critical to mechanisms by which the coding of prediction error by midbrain dopamine neurons is translated into enhancement of attention and learning modulated by the cholinergic system.